This thesis is written with the purpose to analyze immigrants’ effect on new firm formation. Immigrants can ease future sustenance problems of decreasing population growth and growing life expectancy. Immigrants start new firms to a higher extent than ethnic Swedes. Two reasons to that immigrants start new firms is to get out of unemployment and to satisfy a demand of products preferred by certain groups.

This thesis point out cultural and structural factors that contribute to higher immigrant new firm formation rates and what in general diverges from ethnic Swedes’ new firm formation. Also, push and pull effects are discussed. The ordinary and the advanced service sector in Sweden, where 76 % of all new firms were started in 2005, are studied. The result that emerged shows that immigrants from non-Nordic countries have a positive effect on new firm formation. However, people from FIND-countries (Finland, Iceland, Norway and Denmark) did not have a positive effect on new firm formation.