Immigrant self‐employment and local unemployment in Sweden

Abstract

AbstractThis paper investigates the relationship between the local unemployment rate and immigrant self‐employment entry decision. The study uses Swedish population register data at the individual level and the annual unemployment rate data at the local labour market level over the time period of 1996–2007. The paper finds that the local unemployment rate is negatively correlated with the probability of entering into self‐employment for natives and immigrants who are not from the Middle East. Compared with natives, Middle Eastern immigrants are more likely to enter into self‐employment when local unemployment rate increases. Furthermore, the magnitude of the impact of the local unemployment rate on women's self‐employment entry is quantitatively smaller than that of men, indicating the less important role of economic conditions in determining women's decision to enter self‐employment.