From embeddedness to earnings: explaining the immigrant–native income gap in self-employment

Purpose This study examines the income gap between immigrant and native-born self-employed individuals through the lens of the mixed embeddedness perspective. Design/methodology/approach Using eight waves (2012–2020) of Canada's Longitudinal and International Study of Adults (LISA), we examine immigrant–native self-employment income differences using the random-effects generalized least squares, conditional quantile regression, propensity-score matching and mediation tests. Findings Self-employed immigrants earn substantially lower incomes than native-born self-employed individuals. Differences in negotiating, persuading and influencing activities account for approximately 15.4% of this disparity. The income gap is more pronounced among highly educated self-employed individuals, while host-country education significantly narrows the gap. Originality/value This study extends mixed embeddedness theory by identifying negotiating, persuading and influencing activities as a micro-level behavioral mechanism through which embeddedness is translated into self-employment income. The findings further demonstrate that the economic returns to education for self-employed individuals depend not on formal qualifications but rather on the alignment between those qualifications and the host-country environments.