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Intergenerational transmissions in immigrant self-employment: Evidence from three generations

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Abstract

This paper presents the first study of intergenerational transmissions in immigrant self-employment across three generations. Based on a Swedish data set, the results show that having a self-employed father, as well as having a self-employed grandfather, has a positive effect on self-employment propensities for male third-generation immigrants. For native Swedes having a self-employed father is of importance for self-employment propensities, while having a self-employed grandfather is not. Evidently, there appears to be a generational link in self-employment across three generations for immigrants, but not for natives. Since immigrants transfer general self-employment abilities, third-generation immigrants with self-employed ancestors are over-represented in self-employment. Many of them, however, are not necessarily in the same business line as their fathers. In contrast, when natives transfer general self-employment abilities, their offspring tend to become self-employed in the same business line as their fathers.

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Notes

  1. See Borjas (1986), Fairlie and Meyer (1996), Fernandez and Kim (1998), Le (2000), Clark and Drinkwater (2000), Hammarstedt (2004, 2006) and Constant and Zimmermann (2006).

  2. See Borjas (1986), Yuengert (1995), Fairlie and Meyer (1996), Fairlie (1999), Clark and Drinkwater (2000) and Hammarstedt and Shukur (2008).

  3. A number of studies of the individual’s self-employment decision have focused on the importance of having self-employed parents, see Lentz and Laband (1983, 1990), Hout and Rosen (2000), Dunn and Holtz-Eakin (2000), and Hundley (2006).

  4. See Evans and Jovanovic (1989), Lindh and Ohlsson (1996) and Blanchflower and Oswald (1998).

  5. For Sweden, see Hammarstedt (2001).

  6. See Yuengert (1995) and Hammarstedt and Shukur (2008).

  7. As we do not have information on the grandfather’s capital income in 1960, we use the capital income registered in 1968.

  8. We have not matched the individuals in the first generation on the variables educational attainment, marital status, and region of residence in Sweden. We have different reasons for this. As regards educational attainment, first- generation immigrants’ education in most cases is obtained abroad which makes it difficult to match it with Swedish education. As regards the variables martial status and region of residence we have chosen not to match on them since they are changing over the years. An individual who was living as single in 1960 might be married in 1961, etc. Furthermore, individuals might also migrate between different regions in Sweden between different years.

  9. The countries in each region are presented in the Appendix.

  10. The group defined as not self-employed consists of all other individuals, i.e. those who are wage-employed, unemployed, students, early retired, etc.

  11. See Sect. 4 for information on how the business lines have been created.

  12. We have also estimated our models with the age threshold set to 25 and 30 years of age, respectively. Our results remained stable when different age thresholds were used. The results from these estimations are available from the authors upon request.

  13. We have also estimated probit regressions on the probability of being self-employed among second-generation immigrants and natives, i.e. among the fathers of the third-generation immigrants in 1980. As expected, the effect of having a father who was self-employed in 1960 is positive and statistically significant for immigrants as well as natives.

  14. Just as for the probit models we have also estimated our models with different age thresholds. The results remained stable when different age thresholds were used. The results from these estimations are available from the authors upon request.

  15. The sector retail trade/other can only give us an indication of the importance of general human capital transfers, since it is a broad category including various business lines.

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Acknowledgements

The authors are thankful for comments from Lennart Delander, Jan Ekberg, Eskil Wadensjö, Ali Ahmed and Lars Behrenz as well as to seminar participants at Växjö University and SULCIS at Stockholm University. The authors are also thankful for valuable suggestions from two anonymous referees and the editor. Mats Hammarstedt is thankful for the financial support from ‘Riksbankens Jubileumsfond’.

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  1. Department of Economics, Växjö University, Vaxjo, 351 95, Sweden

    Lina Andersson & Mats Hammarstedt

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  1. Lina Andersson
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  2. Mats Hammarstedt
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Correspondence to Lina Andersson.

Appendix

Appendix

Table A1 Definition of countries of origin for the third-generation
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Andersson, L., Hammarstedt, M. Intergenerational transmissions in immigrant self-employment: Evidence from three generations. Small Bus Econ 34, 261–276 (2010). https://doi.org/10.1007/s11187-008-9117-y

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