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Why Do Self-Employed Immigrants in Denmark and Sweden Have Such Low Incomes?


  • Andersson Joona, Pernilla

    () (SOFI, Stockholm University)

  • Wadensjö, Eskil

    () (Stockholm University)


When studying income differences and income distribution, the self-employed are often excluded from the population studied. There are several good reasons for this, for example that incomes from self-employment are not reported to the same extent as incomes from being an employee. On the other hand it is a problem to exclude the self-employed when studying income differences if the group is large, if the share that is self-employed differs between groups and if there is a difference in the average income from self-employment compared to the average wage income. This is the case when we study incomes for immigrants in Western Europe. The immigrants are overrepresented among the selfemployed, self-employed immigrants are in other sectors than self-employed natives, and the incomes from self-employment differ from the incomes of the wage earners. In this paper we look at the incomes for the self-employed in Denmark and Sweden. To minimize the problems with unreported income we will mainly compare the annual incomes of the selfemployed immigrants and their native counterparts. The measurement error should only create a bias in the estimate of the income difference between the groups if there is a systematic difference in how they report their incomes. Using two cross-sections, one for each country, we find large income differences between natives and immigrants in both countries. Regression estimates show that most characteristics have the same influence in the two countries but also some interesting differences. Using quantile regressions we find that the difference in annual incomes differs depending on where in the income distribution we look. We find that the difference is smaller higher up in the distribution.

Suggested Citation

  • Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Why Do Self-Employed Immigrants in Denmark and Sweden Have Such Low Incomes?," IZA Discussion Papers 1280, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1280

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    References listed on IDEAS

    1. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    2. David Brownstone & Robert Valletta, 2001. "The Bootstrap and Multiple Imputations: Harnessing Increased Computing Power for Improved Statistical Tests," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 129-141, Fall.
    3. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    4. Bruce Bradbury, 1996. "Are the Low Income Self-employed Poor?," Discussion Papers 0073, University of New South Wales, Social Policy Research Centre.
    5. Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Other Forms of Employment: Temporary Employment Agencies and Self-Employment," IZA Discussion Papers 1166, Institute for the Study of Labor (IZA).
    6. Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Self-Employed Immigrants in Denmark and Sweden: A Way to Economic Self-Reliance?," IZA Discussion Papers 1130, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Tüzin Baycan-Levent & Peter Nijkamp, 2009. "Characteristics of migrant entrepreneurship in Europe," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 21(4), pages 375-397, July.
    2. Tüzin Baycan-Levent & Peter Nijkamp, 2010. "Migrant Entrepreneurship in a Diverse Europe: In Search of Sustainable Development," Chapters,in: The Sustainability of Cultural Diversity, chapter 16 Edward Elgar Publishing.

    More about this item


    income differences; self-employment; quantile regressions; immigrant workers;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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