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Labour Market Integration in the Nordic Countries

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Labour Market Integration in the Nordic Countries Nordic Economic Policy Review Labour Market Integration in the Nordic Countries Nordic Economic Policy Review Labour Market Integration in the Nordic Countries Bernt Bratsberg, Oddbjørn Raaum and Knut Røed Olof Åslund, Anders Forslund and Linus Liljeberg Matti Sarvimäki Marie Louise Schultz-Nielsen Hans Grönqvist and Susan Niknami Kristian Thor Jakobsen, Nicolai Kaarsen and Kristine Vasiljeva Joakim Ruist Torben M. Andersen (Managing Editor) Anna Piil Damm and Olof Åslund (Special Editors for this volume) TemaNord 2017:520 Nordic Economic Policy Review Labour Market Integration in the Nordic Countries Bernt Bratsberg, Oddbjørn Raaum and Knut Røed Olof Åslund, Anders Forslund and Linus Liljeberg Matti Sarvimäki Marie Louise Schultz-Nielsen Hans Grönqvist and Susan Niknami Kristian Thor Jakobsen, Nicolai Kaarsen and Kristine Vasiljeva Joakim Ruist ISBN 978-92-893-4935-2 (PRINT) ISBN 978-92-893-4936-9 (PDF) ISBN 978-92-893-4937-6 (EPUB) http://dx.doi.org/10.6027/TN2017-520 TemaNord 2017:520 ISSN 0908-6692 Standard: PDF/UA-1 ISO 14289-1 © Nordic Council of Ministers 2017 Print: Rosendahls Printed in Denmark Although the Nordic Council of Ministers funded this publication, the contents do not necessarily reflect its views, policies or recommendations. Nordic co-operation Nordic co-operation is one of the world’s most extensive forms of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, the Faroe Islands, Greenland, and Åland. Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an important role in European and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the global community. Shared Nordic values help the region solidify its position as one of the world’s most innovative and competitive. Contents Foreword by Anna Piil Damm and Olof Åslund .......................................................................... 5 1. Immigrant labor market integration across admission classes .............................................. 17 Bernt Bratsberg, Oddbjørn Raaum, and Knut Røed 2. Labour market integration of refugees in Denmark............................................................ 55 Marie Louise Schultz-Nielsen 3. Labor market integration of refugees in Finland ................................................................ 91 Matti Sarvimäki 4. Labour market entry of non-labour migrants – Swedish evidence .................................... 115 Olof Åslund, Anders Forslund, and Linus Liljeberg 5. The School Achievements of Refugee Children: Lessons from Sweden ............................ 159 Hans Grönqvist and Susan Niknami 6. Does reduced cash benefit worsen educational outcomes of refugee children? ................ 185 Kristian Thor Jakobsen, Nicolai Kaarsen, and Kristine Vasiljeva 7. The fiscal impact of refugee immigration ......................................................................... 211 Joakim Ruist Nordic Economic Policy Review 2017 3 4 Nordic Economic Policy Review 2017 Foreword by Anna Piil Damm and Olof Åslund It is hardly controversial to say that issues related to asylum seekers, refugees and migration in general have been at the core of the political and media debate in the Nordic countries for some time. Severe and long-lasting conflicts put millions of people on the move, on routes and by means endangering lives and creating humanitarian distress. Increased pressure on immigration systems and authorities create a need for international collaboration but also uncover conflicts of interest and increase tensions between countries and political camps and views. Public opinion combined with pressure on reception systems cause rapid and dramatic shifts in policies in some countries, further affecting the conditions for the migrants and for implementing agencies. The Nordic countries exhibit both differences and similarities in their histories of migration policies and patterns. Finland’s history as an immigration net receiver is shorter than those of the other countries. Norway has experienced particularly substantial economic immigration in the 2000s. While Sweden and Denmark share a long history of policy attempts to handle humanitarian and family related immigration, Denmark’s steps toward more restrictive policies started earlier than Sweden’s rapid moves in late 2015. Figure 1 below shows the absolute number of asylum seekers per month to the respective Nordic countries since 2010. A first observation is that there are clear differences in the levels. In this time period Sweden stands out as the country receiving by far the largest number asylum applications compared to its Nordic neighbours (note that the numbers for Sweden are given on the right-hand side axis). This holds also if one considers the fact that Sweden’s population is almost twice as large as that of Norway, Finland, and Denmark respectively. But there are also differences between the three Nordic countries with similar overall populations. During an average month in this time period, Norway received 50 percent more asylum seekers than Denmark. The corresponding figure for Finland compared to Denmark was 30% less asylum seekers. Nordic Economic Policy Review 2017 5 Clearly, the 2015 increase meant an unprecedented situation in all of the Nordic countries connected to Europe’s mainland. In a broader European comparison, however, the Nordic countries are all above average in terms of asylum seekers per capita. In the years 2009–2015 the EU average was about 70 asylum seekers per 10,000 residents, while it stood at about 100 for Finland and Denmark, 200 for Norway and above 400 for Sweden (Dustmann et al., 2016). Note also in Figure 1 that even though there are differences, the variations over time follow similar patterns. In other words, the Nordic neighbours are to a large extent exposed to the same changes due to events in other parts of the world. Another common factor is that the labour market performance of large groups of migrants has been considered a problem for a long time. A substantial research literature as well as numerous reports from governments and organizations has documented employment and earnings disparities and how they evolve, and tried to understand the sources of inequalities. Within the OECD, the Nordic countries tend to be among the ones with greater negative immigrant-native employment differentials. Part of this is due to high labour force participation of natives (which by international comparison is particularly high among women) rather than to poor absolute outcomes among the foreign-born compared to other host countries. On the other hand, the Nordic model(s) are founded on high employment rates of both men and women. The differences seen in the stock of the population are a result of many cohorts experiencing difficulties in the host country labour markets. Thus, although the developments in 2015 and its aftermath have been dramatic and are close in mind, history strongly suggests that substantial challenges would have waited anyway, and will be present regardless of the future development of migration policy and flows. 6 Nordic Economic Policy Review 2017 Figure 1: Number of asylum seekers, by month and country Source: Eurostat. Societal events and processes of this kind and magnitude encompass a multitude of potential questions and perspectives on causes and consequences. The chain from international politics and actions, via the national and regional level, to the individual migrant, resident or citizen is long, multifaceted and complex. There is often little consensus on how to approach a given situation, sometimes due to ideological differences, sometimes due to a lack of knowledge on the impact of different choices. The issues concerned range from purely ethical and moral (which policies can be motivated and defended, and in which and from who’s perspective) to the most practical micro-level decisions (e.g. providing housing for a family and organizing schools for the children). This volume considers economic aspects of refugee migration. Even though this implies something of a restriction in itself, the number of potential topics is vast. There Nordic Economic Policy Review 2017 7 is of course the perhaps mostly debated micro perspective: how do refugees and other migrants fare in the labour markets of the receiving countries, and which factors and interventions influence the outcomes? What happens with labour market outcomes as the duration of the stay increases, and what does this look like in retrospect for cohorts arriving at different points in time? Are outcomes better or worse for people arriving from/to some countries than others? How can this be understood? In which industries and firms do immigrants first enter, and what do their career patterns look like? But an opposite micro perspective is also relevant – how do different types of immigration affect the outcomes and opportunities for the resident population? Such effects can be positive or negative and operate through competition for jobs and wage formation as well as through public finances. In a longer perspective other issues appear. One factor that will be central to the long-run consequences regards the performance of immigrant children in the educational systems of the receiving countries. Also, to what extent will refugee migration affect the overall functioning of the labour market, e.g. the matching between firms and workers?
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