Once they have a few years to get established, recent immigrants are more likely to start businesses, or be self-employed, than the Canadian-born or more established immigrants, a study published Monday by Statistics Canada shows.
Immigrants rarely start businesses on arrival, the study showed, but after four to seven years in Canada immigrants are more likely to have started a business than the Canadian-born, or immigrants who had been in Canada for longer.
Businesses owned by recent immigrants tended to employ fewer people, though the authors point out that this might be due to them being newer.
“It may … be that privately owned firms take a generation or more to attain a significant size, by which time a firm started by an immigrant would be considered to be owned by a Canadian-born person,” the authors wrote.
Recent immigrants were less likely to own construction businesses than the control group, but were about as likely to be self-employed in construction.
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Among immigrants who started businesses, the largest single group was professional, scientific and technical services, followed by retail trade and accommodation and food services; among the self-employed, the largest group, about a third were ‘unknown,’ followed by retail trade, accommodation and food services, and transportation and warehousing.
It’s not clear why immigrants chose some areas of the economy over others.
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“It is possible that the barriers to entry related to these industries (for example, capital costs) are lower here than in other industries, such as manufacturing,” StatsCan official Danny Leung wrote in a livechat about the study today.
It’s also possible that immigrants become entrepreneurs because, without Canadian qualifications, other ways of making a living are closed. In 2012, a Statscan study found that in many cases first-generation immigrants became self-employed because they had no other choice.
“I think it’s a good first step, but there are a lot of questions that they haven’t been able to answer,” said Diane Dyson, research director of WoodGreen Community Services, a social agency in Toronto’s east end.
“We know that immigrants, more and more, are setting up their own businesses,” she explains. “We’re worried about why that is happening. We’re hearing that they’re doing it because they can’t find other jobs, so they have to make money somehow.”
People in precarious employment – cleaners, for example – who are functionally employees can be classed as self-employed contractors, she says.
“I expect that there is bad news behind these numbers – it’s just that we can’t delve into them far enough to see what it is.”
Almost half of the self-employed immigrants in the study had a high school education or less.
Immigrants from English-speaking countries were most likely to become business owners, followed by those from India and China.
The authors did not look at whether immigrants from different regions of the world started businesses in different areas of the economy, or how much money the businesses made. A paper will look at that question later this year, StatCan official Grant Schellenberg told today’s livechat.