What Drives Immigrants to Entrepreneurship? Evidence From Denmark

This paper examines the interplay of "push" and "pull" forces in shaping entrepreneurial decisions, arguing that labor market disadvantages act as a significant push factor, prompting entrepreneurship particularly for immigrants. Leveraging business cycle variations, we investigate how economic downturns, such as the 2008/09 financial crisis, amplify this push mechanism and widen the entrepreneurship gap between immigrants and natives. Using comprehensive data from Danish employer-employee registers, we reveal that immigrants increase more than natives their entrepreneurship engagement during periods of economic hardship. Similarly, rising local unemployment deter entrepreneurship for natives, but it increases immigrant transitions to entrepreneurship instead. We conclude that "necessity" plays a more substantial role in immigrant entrepreneurial decisions. We contribute to the literature on immigrant entrepreneurship, highlighting the critical role of push factors in explaining immigrants' higher rates of entrepreneurship.