Integrating Immigrants: Outcomes Not Attitudes Matter

Many modern economies struggle with integrating foreign-born into their labor markets. In particular, low-skilled immigrants from poor countries experience high unemployment and a range of related social problems. Much has been written about the extent of the problem. In many Western European cities, entire communities of migrants are living in social and economic exclusion. The state of poverty is often persists among their children.

But although the problem is widely acknowledged, the cause of it remains an issue of vivid debate. One line of reasoning is that modern job markets are increasingly knowledge-based. Technological changes have reduced the availability of simple jobs. The supply of the low‑skilled workforce often becomes higher than the demand for it. A limited number of jobs exist at the formal or informal minimum wage levels in various modern economies. Foreign‑born individuals, who often have weak social networks and language skills, find it particularly hard to obtain these jobs.

Another related explanation is that welfare states hinder integration. High taxes and generous public benefit systems reduce the incentives for work. Families with children can experience a situation where their actual incomes are only slightly, if at all, increased when a parent transitions to work. In addition, rigid labor market regulations can make it difficult for outsiders to enter the labor market.

A third view is that the problem is rooted mainly in discrimination and open racism. Immigrants are simply not given a chance to prove themselves since employers chose not to hire them. Direct and indirect racist structures hinder the success of immigrants and their children.

It is difficult to conclusively say which explanations are more relevant than the others. But we can look at the relation between discriminatory viewpoints and the labor market success of migrants. This is made possible by the World Value Survey, an ambitious project to map the prevalence of different attitudes around the world.

Recently the result of latest survey, conducted between the years 2010 and 2014, has been made available. One of the questions included in the survey was how many who would not like to have neighbors which were immigrants or foreign workers. Another was how many who thought that when jobs are scarce, employers should give priority to natives over immigrants.

As shown below, the prevalence of these answers vary greatly between seven modern economies for which data have been released so far. In Germany and the Netherlands for example a fifth of the population express that they would not like to have foreign-born neighbors. The same view is shared by less than four percent of the Swedish population. Likewise, about half of the public in the US, Australia, New Zealand and Spain believed that employers should give priority to natives over foreign-born when jobs are scarce. In Germany and the Netherlands about four in ten hold the same view, compared to 14 percent in Sweden.

 Data from World Value Survey 2010-2014. Unemployment difference from OECD data over “Indicators of integration of immigrants and their children”, given for the years 2009-2010.  Rounded to two significant digits.

However, there is no clear link between tolerance for foreign-born as either neighbors or in the labor market on one hand, and actual labor market success on the other. Sweden, where the public expresses the most tolerant viewpoints, could be expected to be characterized by good labor market outcomes for immigrants. However, Sweden is next  to spain is  characterized with the biggest gap in employment between foreign-born and natives. This relation holds regardless if we look at the difference between low-educated or high-educated people with foreign-born and native backgrounds respectively.

The US on the other hand, has merely 1.4 percentage point higher unemployment amongst high-educated foreign-born compared to natives with similar educational background. Amongst the low-educated in the US the difference is 8.9 percentage points in favor of the foreign-born. At the same time, the share in the US who would not like to have foreign-born neighbors is almost twice as high as in Spain and fully four times as high as in Sweden.

Perhaps it is difficult to find a strong link since the number of countries included is so small. In order to broaden the sample, we can look at the 2005-2009 edition of the World Value Survey. In that survey the question relating to foreign-born neighbors, but not that of allocation of jobs, was asked. The graph below shows the relation between the share who would not like to have foreign-born neighbors on one hand, and the difference in unemployment on the other. 

Source for attitudes towards foreign-born neighbors: World Value Survey 2005-2009. Source for difference in unemployment: OECD data over “Indicators of integration of immigrants and their children”, given for the years 2009-2010. 

The relation between attitudes and employment prospects are not what one would expect. If anything, the countries in which fewest people do not want foreign-born neighbors are also those in which differences in unemployment are the highest. This does not necessarily mean that countries with the different attitude do better. Canada, Australia and New Zealand are nations where a relatively small share has anything against foreign-born neighbors. The same countries have good labor market outcomes for the foreign-born. In Australia and New Zealand, low-skilled individuals with a foreign-born background have slightly lower unemployment than similar natives. In Canada the difference is minute between the two groups.

Given these outcomes it is difficult to conclusively say what factors that favor integration and what obstacles that stand in the way of integration. It could, for example, be argued that the people in countries such as Sweden are giving politically correct responses. These responses do not necessarily have to translate to the discrimination actually faced by immigrants on a daily basis. At the same time, it is clear that the Anglo-Saxon countries are succeeding in integration. This could be attributed to having English as their main language. It could also be attributed to market-based systems with strong incentives for work and relatively free labor markets. In short, attitudes, at least as reported by the World Value Survey, do not seem to explain the differences in integration. Although all enlightened countries should strive for the tolerant views expressed in countries such as Sweden, this does not guarantee well‑functioning integration.

Dr. Nima sanandaji is a frequent writer for the New Geography. He is upcoming with the book "Renaissance for Reforms" for the Institute of Economic Affairs and Timbro, co-authored with Professor Stefan Fölster.

Photo from BigStockPhoto.com.