Immigrant-owned firms create more net jobs and have higher growth than businesses with owners born in Canada, according to newly-released research.
The decade-long research, released Wednesday by Statistics Canada, distinguishes between firms owned by immigrants who entered Canada since 1980 and businesses with Canadian-born owners.
During the period of the study, 2003 to 2013, companies owned by immigrant entrepreneurs accounted for a quarter of all net new jobs created in the private sector, while representing just 17 per cent of firms.
“The results revealed that private incorporated immigrant-owned firms were much more likely than firms with Canadian-born owners to be job creators than job destroyers,” the study authors wrote.
“Based on the raw data, immigrant-owned firms had a higher level of net job creation per firm, and were more likely to be high-growth firms than those with Canadian-born owners.
“But most or all of this gap was due to differences in the characteristics of the firms. Most notably, immigrant-owned firms were younger, and younger firms are more dynamic regarding job creation.”
More than three-quarters of the immigrant-owned firms were less than 10 years old, compared with just over half of those run by someone born in Canada.
Earlier research has shown that younger firms grow faster and create jobs at a higher rate than older firms, the study authors wrote.
But when adjustments were made to account for differences in firm age and other characteristics, the gap between immigrant-owned firms and Canadian-born-owned firms narrowed substantially.
“Young firms accounted for 40.5 per cent of gross job creation, but only 17 per cent of gross job losses in the period studied,” the authors wrote.
“Even if entrants were excluded, since by definition they cannot shed employment, the tendency among young firms was very much toward gross job creation.”
Immigrant-owned companies were also 1.3 times as likely to be high-growth firms, with annual employment growth exceeding 20 per cent, than were those owned by the Canadian-born.
Immigration leads to the creation of new, young and dynamic private incorporated firms, the authors claim.
The authors also wrote about a “years since immigration” effect.
They quoted earlier research that found that immigrants had lower business ownership rates during their first few years in Canada than the Canadian-born population.
But after a number of years in Canada, immigrants had a higher propensity to be business owners than the Canadian-born population.
“In 2012, 90 per cent of firms owned by immigrants who had lived in Canada for five years were young firms,” the report reads.
“Even among firms owned by immigrants who had lived in Canada for 20 years, 43 per cent were young.
“Only among immigrant owners who had lived in Canada for over 30 years did the proportion of young firms in 2012 approach that of Canadian-born owners, at roughly 29 per cent.”
The full paper “Immigrant Entrepreneurs as Job Creators: The Case of Canadian Private Incorporated Companies,” can be found here.
“Although the linked data file currently ends in 2013, the information in this study provides a useful first step in understanding the role of immigrant entrepreneurs in the Canadian economy,” Statistics Canada wrote in a media release.
The study used data from Statistics Canada’s Canadian Employer–Employee Dynamics Databas.
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