Immigrants face persistent employment differentials

A report published by Sweden's Trade Union Institute for Economic Research in December 2002 concludes that, while all immigrant groups become more integrated on the Swedish labour market over time, differences persist compared with native Swedes. For immigrants from eastern Europe and non-European countries especially, the duration of residence has a significant effect on their employment chances. There is also an earnings gap between immigrants and people born in Sweden, but it is relatively small.

In December 2002, Lena Nekby, a researcher at the Trade Union Institute for Economic Research (Fackföreningsrörelsens Institut för Ekonomisk Forskning, FIEF), published a report on how long it takes various immigrant groups to integrate on the Swedish labour market (How long does it take to integrate? Employment convergence of immigrants and natives in Sweden, FIEF Working Paper Series, No. 185, 2002). The report uses longitudinal data covering the period 1990–2000, with information on over 200,000 individuals, of whom more than 19,000 were born abroad.

The report finds that, particularly for eastern European and non-European groups, the duration of residence (ie the number of years an individual has lived in Sweden) has a significant effect on employment chances. These findings are consistent with the 'employment convergence' theory. According to this theory, immigration implies an initial loss of 'human capital'- ie the skills people bring from their home country are not directly transferable to the new country. Information and knowledge of the functioning of the local labour market, as well as language skills and cultural and social know-how, have to be taught. The greater the initial differences between the 'source' and the 'host' country, the longer the integration process takes. Over time, the differences should, however, disappear or at least diminish significantly. The study finds this to be the cases, at least up to and including the first 25 years of residence in Sweden. After that point, no improvements are visible and an employment gap in comparison with 'native' Swedes persist.

Unemployment and earnings gaps

The functioning of the Swedish labour market with regard to wages, unemployment and employment rates has been examined by a number of studies recently. What has been found, according to Lena Nekby, is notably that the risk of becoming unemployed is significantly higher for immigrants than for people born in Sweden. The 'last in first out' redundancy rules in the employment protection regulations (SE9912111F) do not seem to apply to immigrants, and discriminatory behavior and stereotypes may be involved, according to earlier FIEF research (Immigrants' and natives' unemployment-risk: productivity differentials or discrimination?, Mahmood Arai and Roger Vilhelmsson, FIEF Working Paper Series, No. 169, 2001).

The report finds that there is an earnings gap between immigrants and native Swedes, but that it is rather small and particularly so among women. Most immigrant groups who find employment are more or less paid the same amount as native Swedes - the median wage is about 5% lower - apart from non-European groups whose median wage is approximately 10% less. The study concludes that in this respect the Swedish situation differs from the USA, where immigrants earn less than natives during their whole working life. They do, however, find employment to the same extent as those born in the USA after approximately 10 years' residence. In Sweden, the employment levels differ considerably between immigrants and natives even after 25 years, although to varying extents for different groups. On average, immigrants who have lived in Sweden for 21-25 years have an employment rate which is a significant 15 percentage points lower than that of people born in Sweden.

Country-of-orign and gender differences

There is, according to convergence theory, reason to assume that integration takes longer for people who come from a country geographically and culturally distant from the host country. In the Swedish context, it would thus be reasonable to presume that it takes the least amount of time for people from other Nordic countries to become integrated and the longest time for non-European immigrants - both because individuals who move to Sweden have relatively more to learn in the latter case and because employers are less ready to recognise and accept credentials and skills held by these individuals. These assumptions are found to be true in the present report. The study sorts the immigrants into four categories in terms of their country of birth: Nordic, west European, east European and non-European. The results find that the number of years of residence has the strongest impact on the employment chances of east European and non-European immigrants.

In the US literature there is some indication that female immigrants have different employment patterns than both native women and immigrant men, Lena Nekby reports. The so-called 'family investment hypothesis' implies that this is due to immigrant women financing their husband’s investment in local 'human capital'. However, according to the report, Swedish studies find no support for this hypothesis.

Commentary

According to the study, although all immigrant groups’ employment chances increase over time, parallel to their acquisition of local 'human capital' skills, no group becomes fully integrated on the labour market. Within the 25-year period examined by the present research, no immigrant group equals native Swedes in terms of employment chances. After five years of residence, the employment rate for immigrant men is 44 percentage points lower than for native Swedish men, taking into account educational level, age, years of residence, marital status and number of children below three years of age. The differences decrease over the years, but after 20 years of residence, immigrant men still have an employment rate 15 percentage points lower than that of men born in Sweden (according to Len Nekby in FIEF Forskningsinformation 2003-05-02).

Lena Nekby further concludes that immigrant groups’ employment follows that of native Swedes at various distances, but that this distance is proportionally the same over time. It doe not seem to matter whether times are good or bad: 'A sociological interpretation of such patterns is that the underlying social and economic processes which in this manner reproduce the differences between native Swedes and the various immigrant groups year after year, must be extraordinarily strong.' (Nekby, in FIEF Forskningsinformation 2003-05-02, EIRO translation).

Once the immigrant groups have gained access to the labour market they are paid more or less the same as native Swedes, however. In this, the Swedish and US labour markets are diametrically opposed. In the USA, the employment gap has almost disappeared after 10 years of residence, but immigrant groups are paid less throughout their entire working life. (Ann-Britt Hellmark, Arbetslivsinstitutet)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment