New firm formation in old industrial regions – a study of entrepreneurial in-migrants in Bergslagen, Sweden

Abstract

The article examines new firm formation in the old industrial region (OIR) of Bergslagen in Sweden, and in particular the role of in-migrants. The study is based on longitudinal georeferenced microdata (1993–2008) compiled by Statistics Sweden and providing information on individuals' attachments to the Swedish labour market, as well as workplaces and firms, education, income, and family composition. This specially commissioned database enabled the characterization and analysis of emerging forms of entrepreneurship and self-employment, as well as the socio-economics of the labour market. The longitudinal data allowed the authors to trace actions taken by individuals over time. The results indicate that new firm formation is related to private services, rather than to the traditional manufacturing sector and public services that currently dominate the regional labour market. Self-employed in-migrants are active in other sectors than non-migrants, and show some distinct features in terms of their lower age, better education, and more often non-Nordic background. The study showed that both in-migration and return migration had a positive, significant, and substantial effect on migrants' decision to start a business when a number of other individual characteristics had been controlled for.

Keywords:

• entrepreneurship
• in-migration
• new firm formation
• OIRs

Editors: Bjørnar Sæther, Michael Jones, Catriona Turner

Notes

1 The 22 municipalities are Storfors, Munkfors, Kristinehamn, Filipstad, Hagfors, Degerfors, Hällefors, Ljusnarsberg, Karlskoga, Nora, Lindesberg, Skinnskatteberg, Surahammar, Hallstahammar, Norberg, Fagersta, Smedjebacken, Borlänge, Säter, Hedemora, Avesta, and Ludvika.

2 We used three-year periods as a reference point because a one-year period would have been too short to judge the level of survival. We also tested for six-year periods, but the longer time period did not significantly change the order between sectors.

3 Disposable income was highest in the manufacturing sector, both for employees and the self-employed; income level was high in banking and business services, in which self-employed in-migrants were overrepresented; and in most sectors, self-employed in-migrants had less disposable income than non-migrants (BeDa database, unpublished).

4 Self-employed non-migrants are slightly overrepresented among workplaces with 10 or more persons employed: 5.1% compared to 3.5% for in-migrants (BeDa database, unpublished).

5 Unemployed persons in 2005 were excluded from the analysis.

6 We also tested the inclusion of information on non-Nordic immigration. However, the variable did not give any significant effect in any of the models.