The Value of Self-Employment to Ethnic Minorities

Abstract

It is sometimes argued that ethnic minorities have a cultural predisposition towards self-employment. However, this is generally not the preferred option for minority groups. We argue that ethnic minorities face a double risk in deciding between employment and self-employment. While their chances in employment leave them exposed to greater risk than the majority group, self-employment, which is inherently risky for all workers, adds to their general risk environment. We demonstrate a negative underpinning to their self-employed activity, showing that minority groups in the UK earn less in self-employment relative to the white British majority, work longer hours, and have lower job satisfaction. They also leave self-employment sooner to take up a job as an employee and use resources such as higher education to stand a better chance in employment.