Does Self-Employment Income Help Immigrants Close the Immigrant-Native Earnings Gap Faster?

This paper examines the evolution of income disparities between natives and foreigners who immigrated to Canada between 1996 and 2000 over a 19-year period. We analyze changes in the composition of income sources and evaluate the impact of the role of firms. Over the period under review, immigrants have significantly shifted from traditional employment to either complementary or substitute self-employment, compared to natives. We find that this transition plays a pivotal role in narrowing the overall income gap, underscoring the limitations of studies focusing solely on wage differentials.