Why do refugees become entrepreneurs?

Empirical evidence on the importance of individual characteristics and country integration policies

Authors

Jonas Lagerström
Stefan Lång Åbo Akademi University
Maria Ivanova-Gongne Åbo Akademi University
Michael Wynn-Williams University of Greenwich

Abstract

Entrepreneurship rates among refugees differ substationally across EU countries. This paper examines to what extent these differences can be explained by labour market rigidity and integration policies. Using detailed survey information on 518,671 refugees in 17 European countries over the period 2007-2013, we find that 1) self-employment among refugees increases significantly when labour markets become more rigid (we see no such effects for the native population), 2) improved labour market rights for immigrants correspond to reduced self-employment among refugees and an increased probability of being an wage-employee, 3) the individual characteristics that predicts entrepreneurship are fairly similar for refugees and the native population. Our findings suggest that European self-employment among refugees is primarily a choice out of necessity.
Keywords: Self-employment; Entrepreneurship; Refugees; Discrimination; Institutions