The low incomes of self-employed immigrants in Denmark and Sweden

In this paper we analyse the incomes of self-employed in Denmark and Sweden and ask if there exist income differences between natives and immigrants. The OLS-estimates show that non-western immigrants have significantly lower annual incomes than their native counterparts. We then estimate quantile regressions and find that the difference between natives and non-Western immigrants is significantly smaller among those with high incomes (90th percentile) compared to those with low incomes (10th percentile). One explanation for this result may be that immigrants charge a lower price for their goods and services due to discriminatory behaviour among customers. Another explanation may be that non-Western immigrants have a lower reservation wage and hence accept to stay in business receiving a lower profit.