Immigration, Business Ownership and Employment in Canada

This Statistics Canada paper by David Green of the University of British Columbia, Huju Liu and Yuri Ostrovsky of Statistics Canada, and Garnett Picot of the Institute for Research in Public Policy and Citizenship and Immigration Canada, provides new insights into immigrant business ownership and related employment in Canada. Using new data on the immigration status of business owners, it addresses an important question of how immigrant entrepreneurs and their businesses contribute to job growth in Canada.

To conduct their analysis, the authors examine ownership and employment creation between two groups of entrepreneurs, immigrant owners of private incorporated businesses and unincorporated self-employed immigrants. This data enables researchers to present reliable estimates of job creation among recent immigrants to Canada for the first time.

The paper provides two perspectives on job-creation activity of recent immigrants to Canada. It first provides a point-in-time snap shot of immigrant ownership activity among immigrants who have entered the country between 1980 and 2010. Secondly, it examines the evolution of business ownership and job-creation activity among new immigrants in the years after their arrival in Canada by tracking cohorts of immigrants who have arrived over the ten-year period from 2000 to 2010. This longer-term analysis enables the researchers to examine how immigrants’ business ownership and employment generation has evolved over time. To provide a benchmark, the authors compare their results against a group that consists largely of Canadian-born people.

The authors find that while rates of private business ownership and unincorporated self-employment are higher among immigrants than among the Canadian-born population, self-employment is a secondary activity, with most of their earnings coming from paid jobs. Looking at the career trajectories of immigrants, the authors find that immigrants have lower rates of business ownership in the first years after entry to Canada, but after four to eight years in Canada, their business ownership exceeds that of the largely Canadian-born comparison group.

While job creation by self-employment is higher among immigrants, the authors find that newcomers primarily create jobs for themselves as approximately only 3% have paid employees as immigrant-owned private incorporated businesses tend to be smaller than those owned by the Canadian-born population. Hence, on a per capita basis, job creation rates from ownership of private incorporated companies was lower among immigrants than the Canadian-born comparison group.

The authors show that business ownership rates vary significantly by education, age, source region, gender and entry class of the immigrant. Business class immigrants have the higher propensity for business ownership but compared to economic class immigrants comprise a smaller group of immigrants. They therefore represented a smaller source of all immigrant business ownership and job creation in 2010. Due to the relative size of their group, immigrants in the family and refugee classes accounted for the greatest extent of business ownership at rates of 40 to 50 per cent.

The resource provides helpful insights for practitioners, researchers and policy makers who wish to understand the economic experiences of new immigrants in Canada and the extent to which their entrepreneurial activities contribute to job growth in Canada.