CHANGING RATES OF SELF-EMPLOYMENT AMONG
BRITAIN’S ASIANS SUGGESTS ASSIMILATION BY SOME
BUT DISCRIMINATION AGAINST OTHERS
The typical Asian working age male is now younger, better educated and more likely to
be UK-born than his parents’ generation were. According to research by Ken Clark and
Stephen Drinkwater, each of these factors contributes to lower rates of selfemployment, particularly among men of Indian and Chinese ethnicity. This suggests
greater ‘assimilation’ of these groups into the UK labour market and education system.
But the study, presented to the Royal Economic Society's 2007 annual conference at
the University of Warwick, also finds relatively stable rates of self-employment among
Pakistani and Bangladeshi men. It seems likely that discrimination in paid employment
against these groups is keeping them in self-employment, working long hours in
relatively poorly rewarded sectors such as catering and taxi-driving
The stereotype of the Asian businessman, often a shopkeeper or restaurant owner, is
one of the common perceptions of Britain’s ethnic minorities. But the evidence shows
that there is huge diversity in rates of entrepreneurship between different ethnic
minority groups, and that patterns of ethnic self-employment have been changing over
time. Asian groups (Indian, Bangladeshi, Pakistani and Chinese) typically have higher
rates of self-employment than Whites, while Black groups (Black African and Black
Caribbean) have lower rates.
Since 1991, there has been some convergence in self-employment rates; some of
those groups with the highest rates have seen a reduction in entrepreneurial activity
while some of those with the lowest rates have seen their rates rise. In particular, Indian
and Chinese males are now less likely to become self-employed than in the past.
Self-employment is generally higher than average among Asian groups: for example,
while around 17% of White men in employment worked for themselves in 2001, this
rate was 19% for Bangladeshis, 21% for Indians, 27% for Pakistanis and 28% for the
Chinese. But among Britain’s other main ethnic groups, rates are much lower: Black
Africans and Black Caribbean men had rates of around 13%.
There is also ethnic diversity in changes over time. Against a backdrop of a generally
stable aggregate self-employment rate (after the dramatic increases of the 1980s), the
period since 1991 has seen rates fall significantly for Indians (by around 2 percentage
points) and the Chinese (6 percentage points). By contrast, Black Caribbean rates grew
from 9% to 13% and Black African rates grew by around 1 percentage point. Only the
Pakistani and Bangladeshi groups saw their rates stay broadly the same.
The researchers use data from the 1991 and 2001 Censuses, along with the Labour
Force Survey, to analyse these trends. They find that much of the falling selfemployment among Indians and Chinese can be ascribed to factors consistent with the
greater ‘assimilation’ of these groups into the UK labour market and education system.
In particular, the proportion of Chinese men with higher qualifications grew from 27% to
43% between 1991 and 2006 while for Indians the figures were 24% in 1991 and 40%
in 2006. Formal educational qualifications are more highly rewarded in the paid
employment sector so this growth in human capital has contributed to the decline in
self-employment for these groups.
Similarly, the fact that the average working age Asian is now younger and more likely to
be born in Britain, compared with 1991 also tends to reduce the propensity of
entrepreneurship as older workers and first-generation immigrants have an increased
likelihood of being in business for themselves.
One puzzle that emerges from the research is the fact that self-employment rates of
Pakistani and Bangladeshi males have remained broadly stable in spite of the fact that
this group shares many of the demographic trends of the other Asian groups. It is
estimated that the Pakistani/Bangladeshi self-employment rate should have fallen by
around 3 percentage points on the basis of demographic changes alone.
The fact that it did not suggests other factors are at work. It seems likely that
discrimination in paid employment against Pakistani and Bangladeshi men is
responsible for pushing them into self-employment, working long hours in relatively
poorly rewarded sectors such as catering and taxi-driving. Given this, government
policy should pay attention to the quality, as well as the quantity, of self-employment
among all ethnic groups.
ENDS
Notes for editors: ‘Changing Patterns of Ethnic Minority Self-Employment in Britain:
Evidence from Census Microdata’ by Ken Clark and Stephen Drinkwater was presented
at the Royal Economic Society’s 2007 annual conference at the University of Warwick,
11-13 April.
Stephen Drinkwater is at the University of Surrey; Ken Clark is at the University of
Manchester. Their research was funded by the Joseph Rowntree Foundation.
For further information: contact Ken Clark on 0161 275 3679 (email:
ken.clark@manchester.ac.uk); Romesh Vaitilingam on 07768-661095 (email:
romesh@compuserve.com).