Explaining Cross-Country Differences in Labor Market Gaps between Immigrants and Natives in the OECD

30 Pages Posted: 16 Aug 2014

See all articles by Andreas Bergh

Andreas Bergh

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Date Written: August 14, 2014

Abstract

In most OECD-countries, immigrants have lower employment and higher unemployment than natives. This paper compares nine potential explanations of these gaps. Results are obtained for 21-28 countries using bivariate correlations, OLS-regressions and Bayesian model averaging over all 512 theoretically possible model specifications. Two robust patterns are found. The unemployment gap is bigger in countries where collective bargaining agreements cover a larger share of the labor market. The employment gap is bigger in countries with more generous social safety nets. Five variables have explanatory value in some specifications: Xenophobia, employment protection laws, social expenditure, asylum applications, and the share of immigrants in the population. The education of immigrants and migrant integration policies have no explanatory value. A trade-off seems to exist such that countries with smaller labor market gaps have higher income inequality.

Suggested Citation

Bergh, Andreas, Explaining Cross-Country Differences in Labor Market Gaps between Immigrants and Natives in the OECD (August 14, 2014). IFN Working Paper No. 1036. Available at SSRN: https://ssrn.com/abstract=2480517

Andreas Bergh (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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HOME PAGE: http://www.ifn.se/web/AndreasB

Lund University - Department of Economics ( email )

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Lund
Sweden

HOME PAGE: http://www.nek.lu.se/

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