Linking Self-Employment Before and After Migration: Migrant Selection and Human Capital

• Main Author: Andrey Tibajev
• Format: Article
• Language: English
• Published: Society for Sociological Science 2019-11-01
• Series: Sociological Science
• Subjects: migration; entrepreneurship; human capital; event-history analysis; level-of-living survey
• Online Access: https://www.sociologicalscience.com/articles-v6-23-609/

In linking self-employment before and after migration, the often-cited home-country self-employment hypothesis states that immigrants who come from countries with large self-employment sectors are themselves more likely to have been self-employed and hence have a higher propensity for self-employment in their destination country. Using Swedish data, this study shows that the first part of the hypothesis, that origin-country average rates of self-employment can be used to approximate individual experience, is false; but the second part, the connection between self-employment before and after migration, is true if the measurement is done on the individual level. Migrants who have been self-employed before migration accumulate entrepreneurial human capital, making future self-employment a more desirable labor market alternative vis-à-vis wage employment. But because of migrant selection, this association cannot be captured by aggregate measures, and this is the reason why the home-country self-employment hypothesis, although intuitive, has underperformed in previous empirical tests.