Institutional embeddedness and self-employment: does ethnicity matter?

This paper seeks to provide new insights aboutthe role played by institutional embeddedness in explaining self-employment (SE) in Europe. In addition to the variables typically used to capture formal institutions, we have considered informal institutions such as the relevance of the shadow economy and the perception of corruption. We have also explored the mediating role played by ethnicity, assuming that the native and foreign-born populations have different attitudes toward SE. Moreover, unlike most previous studies, which tend to focus on a specific country, our analysis is conducted in a multi-country framework. Our results highlight the heterogeneous impact of the institutional framework on SE decisions between these two population groups. More specifically, informal institutions have opposite effects on natives and migrants.