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May 08, 2019STUDY: IMMIGRANT ENTREPRENEURS AS JOB CREATORS Statistics Canada recently released a study comparing the job creation and destruction at private incorporated companies with immigrant and Canadian-born owners. Before controls for firm characteristics immigrant-owned firms had higher net job growth per firm and a higher likelihood of being a high-growth firm. Controlling for firm characteristics found that immigrant-owned firms were on average younger firms which accounted for the greater job creation. A constant inflow of new immigrant-owned firms led to creation of a larger number of new young firms that disproportionately contributed to net job creation.
Data for the study comes from the Canadian Employer-Employee Dynamics Database (CEEDD), which includes data from T2 corporate tax data, T1 individual tax data, T4 records of remuneration issues by employers, LEAP, and Longitudinal Immigration Database. The period of study was from 2003 to 2013 for private incorporated firms. Immigrant-owned firms accounted for around 17 per cent of the nearly 8 million firm-year observations. Net job creation is based on the change from one year to the next for each firm and high growth firms are classified as having 20 per cent employment growth for the year. Controls used in the regression analysis included firm age, firm size, industry, province, numbers of owners.
The unadjusted (raw) data show that annual average net number of jobs crated per firm was 0.18 with Canadian-born owners having generation of 0.16 net jobs per year and immigrant-owned firms having 0.28 jobs per year. Immigrant-owned firms generated 25 per cent of net new jobs while accounting for only 17 per cent of private incorporated firms in the study. Entrants played a larger role among immigrant-owned firms and accounted for 27 per cent of the gross job creation among immigrant-owned firms compared to only 18 per cent among Canadian-born owners.
Controlling for differences in firm characteristics between immigrant-owned firms and firms with Canadian-born owners with regression analysis suggest that the control variables accounted for the difference in job creation behaviour between immigrant-owned and Canadian-born owners. Younger firms tend to be more dynamic and create and lose jobs at higher rates than older firms and immigrant-owned firms are younger on average. The study notes that immigration leads to the creation of new, young and dynamic private incorporated firms with recent immigrants being more likely to be operating young firms. Among firms with positive employment growth, 27.3 per cent of immigrant-owned firms were considered high-growth firms compared with 21. 3 per cent of firms with Canadian-born owners. The distribution of annual employment growth rates shows immigrant-owned firms being more likely to have growth rate above 0.2 or 20 per cent (see graph below).
The study also examined immigrant characteristics to determine if these changed the likelihood of being a high-growth firm. The characteristics of immigrant owners (source region, educational attainment and immigration class) had relatively little effect on the likelihood of a firm being a high-growth or rapidly shrinking firm.
Statistics Canada : Immigrant Entrepreneurs as Job Creators: The Case of Canadian Private Incorporated Companies
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