The Labor Market Performance of Individuals with Foreign Backgrounds.

Abstract: This paper uses individual data from a collected survey, performed in Sweden by the SOM institute, to study individuals with foreign backgrounds in the labor market. We use The Ordinary Least Squares model, where we control for age, education, and gender to explore the difference in incomes between immigrants, children of immigrants, and natives in wage-employment, unemployment, and self-employment. The contribution of this paper is the second generation immigrants, we will assess their performance on the labor market in order to evaluate if self-employment is a profitable alternative. The second generation immigrants act as a benchmark for a functioning integration policy, it is therefore crucial to examine if we can observe any labor market barriers for the second-generation immigrants. The result display that immigrants do perform worse in both wage-employment and self-employment compared to natives. By being self-employed, immigrants earn 25.9 percent less than if they would have been wage-employed. The situation for the children of immigrants is different. Children of immigrants seem to perform better than immigrants on the labor market, especially in wage-employment. One could therefore conclude that since immigrants struggle with finding wage-employment, self-employment may be an alternative. However, self-employment should not be an option for the children of immigrants. It seems that they succeed in finding wage-employment, and they do better in wage-employment compared to self-employment. So, the promotion of self-employment should be more cautiously made since it may not always have a good economic outcome for the individual.