LABOUR INSTITUTE FOR ECONOMIC RESEARCH Characteristics and labour market performance of East-European immigrants in Finland, Germany, the Netherlands and

LABOUR INSTITUTE FOR ECONOMIC RESEARCH

Characteristics and labour market performance of East-European immigrants in Finland, Germany, the Netherlands and the United Kingdom

(work in progress)

Economic Impact of Immigration and Population Diversity International Workshop

Wednesday 11 April – Friday 13 April 2012University of Waikato

Mari Kangasniemi* and Merja Kauhanen**Labour Institute for Economic ResearchPart of a NORFACE project ”Migrant diversity and regional disparity”


The EU eastern enlargement

• In 2004 eight Eastern and Central European countries (Estonia, Hungary, Latvia, Lithuania, Poland, Czech Republic, Slovakia and Slovenia –EU8) together with Cyprus and Malta joined the union.

• In the beginning of 2007 Romania and Bulgaria were admitted to the union.

-> Most EU15 countries experienced an increase in immigration from the new member states after the EU enlargement.

From year 2003 to year 2007 the number of foreign residents from the EU8 in the EU15 countries increased from almost 893,000 to more than 1.91 million (Brücker et al., 2009).

During same period foreign population from Bulgaria and Romania in the EU15 countries increased from 700,000 to 1.9 million (Brücker et al., 2009).


Purpose of the study & motivation

• Purpose of this study is to investigate labour market performance of immigrants from NMS12 countries in four EU15 countries – Finland, Germany, the Netherlands and the UK after the enlargement

- Besides differences in transitional arrangements these four countries vary with respect to the share of immigrant population, the length of tradition of immigration, language and cultural barriers, and institutional structures

We look at the characteristics of immigrants from the new EU member states (called NMS12 hereafter) – how they differ from other immigrants and the natives of the host country

And how they are faring in the host country’s labour market Try to give explanations of differences in the performance between the four

countries


Earlier literature

Determinants of East-West migration: • higher income, better working conditions, opportunities of finding a

suitable job (Fouarge & Ester 2007, Bonin et al. 2008, Kahanec and Zimmermann 2008)

• Linguistic and geographical distances, migrant networks (Kahanec and Zimmermann 2008)

• Borjas (1987): choice of the host country depends on the level of individual ability, how returns to ability are correlated between countries and how abilities are distributed in each country.

- If the skills are transferable, immigrants from a lower inequality country should be positively selected and immigrants from a higher income inequality country negatively selected.

• McKenzie and Rapoport (2008): larger migration networks tend to increase the likelihood of negative self-selection with respect to education


Earlier literature

• Immigrants’ labour market performance – most literature concentrating on North America (e.g. Chiswick 1978, Borjas 1985, 1999)

• The employment gap between immigrant and natives e.g. Amuedo-Dorantes and de la Rica (2007), Van Ours and Veeneman (1999), Dustmann et al. (2007) etc.

• Labour market performance from new member states: in UK (e.g. Drinkwater et al. 2006, Anderson 2006, Clark and Drinkwater 2008, Longhi 2011), in Germany (e.g. Brenke et al. 2009; Kogan 2010), in Ireland e.g.Barrett et al. 2007)

• Country comparisons to much lesser extent

MEKA

Most often focus on immigrants' earnings

MEKA

for Spain

MEKA

for Netherlands

MEKA

UK


Transitional arrangements for free movement

• Allowed the EU member states to postpone the free movement of the workers up to seven years

• Three different phases: 2+2+3 years

Merja Kauhanen

first two years all member states can apply national rules on access to their labour markets, at the end of this two year period each member state can decide to apply national rules for another three years. After this extension of two years if it experiences serious disturbances in its labour market


Transitional arrangements for workers from NMS8 in Finland, Germany, the Netherlands and the UK (source: Brücker et al., 2009).

1st phase (May 1, 2004-April 30; 2006)

2nd phase (May 1, 2006-April 30; 2009)

Finland labour market access restricted (Finnish law 309/2004)

Community rules for free movement apply, registration required

Germany labour market access restricted; limited number of work permits for seasonal and project-tied workers granted; provision of services restricted in specific sectors (construction, cleaning, etc.)

as in first phase, although no labour market test for certain engineers from 15 October 2007

Netherlands labour market access restricted; in specific sectors and occupations a privileged access

Community rules for free movement apply since May 1, 2007

UK access to labour market granted, but obligation to register for work and residence permits; work permits issued for limited time; safeguard clause applies

as in first phase


Economic conditions in Finland, Germany, the Netherlands and the UK

period: 2004-2008 GDP growth Employment growth Unemployment rate

Finland 3.4 2.0 7.4 Germany 2.0 0.9 9.5 Netherlands 2.7 1.6 4.1 UK 2.0 0.5 5.3


Data

• Micro level data drawn from the European Union Labour Force Survey (LFS) from years 2004-2009 for the four countries

• LFS is a representative and continuous cross-sectional survey which includes information on a wide range of variables like household and personal characteristics, labour market status and education

• A high degree of comparability due to same set of characteristics in each country; a close correspondence between the EU list of questions and the national questionnaires; the use of the same definitions for all countries; the use of common classifications, and Eurostat centrally processing the data

• A prerequisite for participating in the survey is that a person has lived or has an intention to live in that country for at least a year.

Merja Kauhanen

Therefore it is possible that this type of survyes undersample recent immigrants


Definition of NMS12 immigrants

• Immigrants are defined according to the citizenship on which information is available for all four countries in the data

• Other alternative: country of birth (this information missing from Germany in the EU-LFS)


Figure 1. Share of NMS12 immigrants of total immigrant population (15-64-year-old individuals)

0,0

5,0

10,0

15,0

20,0

25,0

2004 2005 2006 2007 2008 2009

Source: National population statistics (Finland), otherwise EU-LFS

%

Finland

Germany

Netherlands*

UK

Trend in the share of NMS12 immigrants of all immigrants

Merja Kauhanen

IN the UK the share of NMS12 immigrants of total immigrants population increased fourfold during period 2004-2009. Also increase in the other 3 countries, but more modest. The share of NMS12 immigrants at high level even before EU membership due to Estonian immigrants in Finland.


Characteristics of NMS12 immigrants

Finland NMS12 All immigrants Native % Female 62.3 50.4 49.4 Mean age 36.3 36.5 40.3 % Married 55.8 59.4 44.7 % Lower secondary education

35.8 35.6 25.7

% Upper secondary education

46.7 42.6 44.8

% Tertiary level education

17.5 28.0 29.5

Source: EU-LFS. Notes: All figures are population weighted Germany NMS12 All immigrants Native % Female 63.4 49.6 49.5 Mean age 36.2 37.8 40.2 % Married 61.6 62.9 52.0 % Lower secondary education

23.0 49.1 20.5


54.2 36.0 57.8


22.8 14.8 21.7

Source: EU-LFS. Notes: All figures are population weighted

Netherlands NMS12 All immigrants Native % Female 75.0 52.2 49.5 Mean age 32.6 36.5 40.0 % Married 44.0 55.2 50.6 % Lower secondary education

27.4 39.9 32.2


41.0 36.2 41.1


31.6 28.0 27.5

Source: EU-LFS. Notes: All figures are population weighted. UK NMS12 All immigrants Native % Female 49.0 51.1 50.2 Mean age 30.2 34.6 39.4 % Married 40.6 51.0 48.8 % Lower secondary education

20.8 21.4 29.3


65.3 50.5 43.2


14.0 28.0 27.5

Source: EU-LFS. Notes: All figures are population weighted.

Merja Kauhanen

Immigrants from NNMS12 countries are on average older in Finland and Germany compared to the other two countries. NMS12 immigrants have higher ecucational level compared to all immigrants in Germany and the Netherlands. Compared to host country's natives immigrants have quite similar level of education in Germany. IN the UK 65 % of NMS12 immigrants have upper secndary education - share higher than in any other of the four countries.


Labour market performance of NMS12 immigrants

• How immigrants fare with respect to labour market outcomes is influenced by the extent to which their existing levels of education, experiences and training are valued in the host country.

• Measures of labour market performance in this study: Labour force participation rate Employment rate Type of employment (temporary/permanent; full-time/part-time; self

employment) Occupational structure


Figure 5. Labour force participation rates: NMS12 immigrants, all immigrants and the native population (15-64-year-old individuals), % (Source EU-LFS) (population weights used).

Finland

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

Germany

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

Netherlands

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

UK

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native


Figure 2. Employment rates: NMS12 immigrants, all immigrants and the native population (15-64-year-old individuals), % (Source EU-LFS).

Finland

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

Germany

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

Netherlands

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native

UK

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

%

NMS12

All immigrants

Native


Self-employed (share of all employed %)

14,2

15,415,9

10,811,5

12,212,2

10,8

12,313

0

2

4

6

8

10

12

14

16

18

Finland Germany Netherlands UK

%

NMS12

All immigrants

Natives

Merja Kauhanen

NMS12 immigrants work more often as self-employed. Due to small number of observations figures for NMS12 immigrants cannot be presented for Finland


Temporary employment – share %

18,1

10,2

14,9

24,1

9,8

14,3

12,313,5

4,2

0

5

10

15

20

25

30


%

NMS12

All immigrants

Natives

Merja Kauhanen

An indication of the labour market position of NMS12 immigrants is the type of jobs they hold. NMS12 immigrants overrepresented in temporary jobs in Germany and UK. IN UK the share of temporary workers among NMS12 immigrants is over twice as high than the corresponding share among natives. Again figures for Finland and Netherlands cannot be presenterd due to small numer of observations.


Part-time employment – share %

35,5

13,5

28,1

40,1

20,4

13

24,1

46

24,6

0

5

10

15

20

25

30

35

40

45

50


%

NMS12

All immigrants

Natives


Duncan dissimilarity index across occupations

where Ik/I is the percentage of immigrants in occupation k and

Nk/N is the percentage of natives in occupation k

- Ranges from one (total segregation) to 0 (total integration)

,1

1 | |2

kk

ki n

j

NID

I N


Duncan dissimilarity index across occupations: NMS12 immigrants and native population 2004-2009

All Low Medium High Finland 0.141 0.168 0.164 0.230 Germany 0.199 0.211 0.233 0.149 Netherlands 0.167 0.221 0.262 0.140 UK 0.360 0.339 0.332 0.374


Share in elementary occupations

• A possible explanation for the large share of immigrants in elementary occupations: poor skills of the local language, a lack of knowledge of institutions and deficiency of the host-country-specific capital in general (Zorlu, 2011). The degree of skill transferability may also have an impact on the occupational alternatives immigrants have in the host country labour market.

NMS12 immigrants

Natives

Finland 18.2 8.0 Germany 19.4 7.4 Netherlands 22.6 8.6 UK 31.9 10.2


Employment and labour force participation probabilities

• Method: estimate probit binary response models of the probability of being employed and participating in the labour force

• In the model control for a number of individual-specific characteristics such as gender, marital status, educational level, citizenship, dummy variables denoting the region of residence and year dummies

*ity


Figure 5. Employment differentials in comparison to native population (15-64-year-old individuals), % (Source EU-LFS) (background characteristics controlled for).

Finland

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

Germany

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

Netherlands

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

UK

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

Merja Kauhanen

Compared to natives NMS12 immigrants have lower probability of employment in all countries except for UK. The differential is 4,9 %points in Finland and in the Netherlands 14,2 %points. Note that compared to EU15 immigrants NMS12 doing better in UK and worse in the Netherlands and in Germany.


Figure 6. Labour force participation differentials in comparison to native population (15-64-year-old individuals), % (Source EU-LFS) (background characteristics controlled for).

Finland

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

Germany

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

Netherlands

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group

UK

-30 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

5 %

10 %

NMS12 EU15 Other

Immigrant group


Conclusions

• NMS12 immigrants are on average younger than natives, have higher education compared to all immigrants

• Work more often as self-employed or in less secure contractual arrangements compared to natives in Germany and the UK

• Compared to natives NMS12 immigrants are overrepresented in semi-skilled and elementary occupations. Of the four countries the share of NMS12 immigrants in elementary occupations is largest in the UK

• The results indicate that the relative performance of immigrants from the new member states varies by host country

• Have a lower probability of employment in all other countries except for the UK compared to natives. The employment differential varies from 4.9 percentage points in Finland to 14.2 percent points in the Netherlands


Conclusions

• Possible explanations for differences in labour market outcomes in these four host countries: Language, cultural barriers, institutional structures, assimilation policies

• Extensions: Further investigate the reasons behind the differences, for

example the role of labour market institutions in the sending and the receiving countries

Use country of birth instead of citizenship (except for Germany)

Documents

LABOUR INSTITUTE FOR ECONOMIC RESEARCH Characteristics and labour market performance of East-European immigrants in Finland, Germany, the Netherlands and