Immigrant Careers - Why Country of Origin Matters

Sammanfattning: This dissertation examines the labor market outcomes of a population of natives and immigrants in Sweden from 1968 and until 2001. Previous research has consistently pointed to the importance of an individual’s country of origin, without being able to fully explain why this is the case. The standard approach is to use the country of origin as a way to measure everything occurring prior to migration, including linguistic and cultural differences from the destination country. Using unique information on an immigrant’s experience prior to migration, this thesis differentiates some of the mechanisms which are usually merged into the country of origin effect. Including measurements of language skills, labor market experience, formal education and early-life conditions, the thesis empirically estimates the magnitude of their effects on immigrants’ post-migration labor market outcomes. The thesis furthermore assumes a full career perspective and examines the influence of such pre-migration factors on the immigrants’ entire labor market career in Sweden. In the initial transition to the Swedish labor market, the influence of language skills is shown to be important for highly-skilled immigrants in particular. This finding is consistent with the expectation that communicative skills are more highly valued in occupations that require advanced formal skills. This is supported by the finding that those highly-skilled immigrants who are familiar with a language belonging to the Swedish language family experience a considerably more favorable transition to the Swedish labor market compared to those characterized by a greater linguistic distance. Still, among the immigrants in high-skill occupations prior to migration, labor market experience obtained prior to migration is also associated with a positive and non-negligible effect on the initial transition to the Swedish labor market. According to the results of the thesis, worse labor market outcomes for immigrants could also be caused by health conditions experienced during infancy, measured as the infant mortality rate. Establishing that conditions at the time of the individual’s birth are associated with attained adult income is therefore another key finding of this thesis. Furthermore, as individuals’ outcomes are observed at an age empirically shown to be a good predictor of lifetime earnings, this indeed suggests that an individual born under comparatively adverse conditions is likely to become permanently disadvantaged in the labor market. The infant mortality rate, measuring the health conditions to which an individual is exposed during their first year of life, has improved considerably worldwide over time. Despite this, contemporary immigrant cohorts typically have experienced comparatively worse early-life conditions than birth cohorts who migrated in the 1960s or the 1970s. An extension of the results therefore becomes to associate a part of the observed immigrant disadvantage to having been exposed to comparatively adverse conditions during early-life. More specifically, such a disadvantage may be manifested both as a greater initial disadvantage subsequent to migration, and as a less favorable career trajectory compared to an individual subjected to more favorable early-life conditions. The labor market changes characterizing Sweden in the time period examined in this thesis were expected to be associated with substantial implications regarding the immigrant’s career opportunities. The decline of low-skill jobs in general, and the private manufacturing sector in particular, implied a contraction of typical entry-jobs for immigrants in the Swedish labor market. Simultaneously, the growing share of high-skill jobs in the public and the private service sectors was believed to be associated with requirements that many immigrants do not fulfill. This thesis shows considerable differences in the opportunities for career progress between labor market sectors. The shrinking private manufacturing sector indeed appears to be associated with an absence of career opportunities for immigrants, increasing with linguistic distance. Immigrants are also disadvantaged in the private service sector, which tentatively is linked to this sector’s comparatively high demands for communicative skills. Furthermore, employers in this sector could be more likely to rely on informal recruitment methods which may lead to an exclusion of immigrants. Therefore, it is expected that the public sector is a more beneficial sector for immigrants in terms for career opportunities, given their greater reliance on formal recruitment methods. An exception to the favorable immigrant career opportunities in the public sector is, however, represented by individuals from countries with mother tongues most distant from the Swedish language in terms of origin and writing system. Lastly, among immigrants with advanced formal qualifications obtained prior to migration, substantial differences in their income assimilation trajectories are observed that is linked to the educational type of their formal degree. In particular, immigrants with pre-migration degrees within Health Care are observed to experience a comparatively favorable post-migration labor market experience. Regardless of the educational type to which an individual’s degree belongs, formal human capital investments are found to exert a positive effect on that individual’s trajectory towards income assimilation.