NERO INTEGRATION OF REFUGEES (NORDIC COUNTRIES) Emily Farchy, ELS/IMD

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1 NERO INTEGRATION OF REFUGEES (NORDIC COUNTRIES) Emily Farchy, ELS/IMD

2 Sweden Netherlands Denmark United Kingdom Belgium France Austria Ireland Canada Norway Germany Spain Switzerland Portugal Luxembourg Finland Greece Italy United States 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Integration outcomes differ dramatically across countries Employment by educational attainment, 2014 Percentage point differences in the employment/population ratios between native- and foreign-born, years old Low Employment by educational attainment, 2014 Percentage point differences in the employment/population ratios between native- and foreign-born, years old High Notes: Low/Medium/High education refers to ISCED levels 0-2/3-4/5+. Source: European Labour Force Survey 2014 But to what should we attribute these disparities?

3 To what should we attribute these disparities? Differing labour markets, 16% 14% 12% 10% 8% 6% 4% 2% 0% Low-skilled employment, 2013 Percentage of working age population, Switzerland Sweden Finland Greece NetherlandsLuxembourg Austria Denmark United Kingdom Ireland France Belgium Italy Portugal Spain Differing institutions Proportion with very basic education, by place of birth, aged 16-65, 2013 Proportion with ISCED 0/1, by place of birth 50% Native Born Foreign Born 40% 30% 20% 10% 0% Sweden Finland Netherlands Norway United States Denmark France Belgium Germany Austria Spain Italy United Kingdom Canada Estonia Australia Ireland

4 To what should we attribute these disparities? Differing norms Netherlands Sweden Denmark Finland Belgium France Germany Austria Norway Switzerland Australia Poland Mexico Canada United Kingdom United States Iceland Turkey New Zealand Czech Republic Ireland Slovak Republic Spain Italy Greece Hungary Portugal Luxembourg Employment rates of foreign-born women, 15 to 64, 2015 Gaps with native-born Levels Turkey Mexico Greece Belgium France Italy Poland Spain Netherlands Slovak Republic Finland Ireland Denmark United States Austria Czech Republic Germany Sweden Hungary Australia United Kingdom Luxembourg Norway Canada Portugal New Zealand Switzerland Iceland

5 Canada New Zealand Sweden Australia Finland France Portugal Netherlands Norway Italy Belgium Austria Denmark Germany United Kingdom Spain Switzerland Ireland To what should we attribute these disparities? Differing migrant populations? Permanent migration flows, Percent 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other Free movements Work Family Humanitarian Source: IMD International Database Snapshot approach: (eg Chiswick, 1978 and Carliner, 1980) Cross sectional model examining workers wage rate as a function of socioeconomic characteristics, age, and years of residence At arrival earn less, less country specific human capital Then faster wage growth thereafter until overtake (approx 15 years)

6 Differing migrant populations across time? But what if newly arrived immigrants are inherently different than those that arrived in the past - Migration policies: Reason for migration? - External factors: wars in different origin countries Permanent migration flows, by type, Norway 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Free movements Humanitarian Family Work

7 Employment rate Economic climate Synthetic panel approach (eg Borjas 1985) Separates cohort effects from years since migration Track immigrant and native populations over time But interpreting trend derived from repeated cross-section as a measure of relative changes in skills implicitly assumes that period effects influence the wage of immigrants and natives by the same relative amount Differential impact of macro-economy on migrants/natives But what if the economic climate effects the foreign- and native born to a different extent Employment rate of refugee cohort by duration of stay, There is now substantial evidence that new labour market entrants suffer disproportionately from slack in the labour market Duration of stay (years)

8 Specification For the foreign-born population and: y jpt = YSM jt α + A jt δ I + C jm β m + γ t + k I u pt + v p + ε jt And for the native-born population: y jpt = A jt δ N + γ t + k N u pt + v p + ε jt y jpt represents the employment/log earnings of person j residing in province p observed in year t Coefficients on age and local employment are allowed to differ between natives and foreign born Failure to allow (k N k I ) leads to bias if trend in ument because: Partial correlation between YSM and unemployment iff unemployment is trending because YSM perfectly correlated with calendar time within cohort, and time is correlated with ument Difference between immigrant and native responsiveness to local economic conditions

9 Results: Country of origin Employment assimilation, by country of birth Disparity between foreign- and native-born predicted employment 0-10 Estonia -20 EU15, USA and Canada -30 Russia & F. Soviet Union F. Yugoslavia -60 Iraq -70 Somalia -80 Years since arrival - Earnings assimilation shows a similar pattern - Results remain broadly similar when native born counterfactual is restricted to those with only a low level of education

10 Results: Country of origin, by gender Employment assimilation, by country of birth Disparity between foreign- and native-born predicted employment Years since arrival Years since arrival Years since arrival Somali Male Somali Female Iraqi Male Iraqi Female Russia & F. Soviet Union Male Russia & F. Soviet Union Female Estonia Male Estonia Female F. Yugoslavia Male F. Yugoslavia Female EU15, USA and Canada Male EU15, USA and Canada Female

11 Concerns Selective out migration? Assimilation of the foreign-born by total duration of stay Adjusted employment performance by years of arrival Short term (0-5) Early leavers (6-10) Stayers (11+) Assimilation of the foreign-born by total duration of stay Adjusted employment performance by years of arrival Unbalanced sample? Assimilation of the foreign-born by total cohort Male Years since arrival Assimilation of the foreign-born by total cohort Female Years since arrival Short term (0-5) Early leavers (6-10)

12 For further information on the OECD s work on the labour market integration of immigrants and their children: 12

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