Does Self-Employment Contribute to Immigrants’ Economic Integration? Examining Patterns of Self-Employment Exit in Belgium

Abstract

This article assesses whether self-employment can help immigrants overcome some of the ongoing challenges they face in highly segmented labor markets, by investigating the reasons behind native-immigrant differences in exit from self-employment. While a considerable literature examines the factors influencing immigrants’ decision to become self-employed, surprisingly few studies address the factors that shape exit from self-employment. This article studies native-immigrant differences in self-employment exit, drawing on longitudinal data (2008–2017) for Belgium, and adds to previous research on immigrant self-employment by considering second-generation and female immigrant business owners. Results show that immigrants were much more likely than natives to become unemployed or leave the labor force after a period in self-employment, supporting the idea that immigrants are pushed out of self-employment. Second-generation immigrants generally had better self-employment outcomes than first-generation immigrants, whereas female immigrants sometimes experienced a “double disadvantage.” Weaker attachment to the labor market preceding self-employment entry helps explain why immigrants had worse self-employment outcomes than natives in Belgium. Hence, self-employment may not provide an independent path to economic integration that allows immigrants to overcome the hurdles they face in the labor market. Instead, how people fared in the labor market before becoming self-employed strongly influenced their success as self-employed workers. This article highlights the policy complexity of immigrants’ labor market integration in Western European labor markets. As it shows, it is not enough to promote self-employment as an easy way out of immigrants’ labor market exclusion. Instead, more is needed to counteract immigrants’ problematic labor market outcomes.