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Assimilation to a Welfare State: Labor Market Performance and Use of Social Benefits by Immigrants to Finland

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  • Matti Sarvimäki

Abstract

Abstract: I study the assimilation of immigrants to the Finnish labor market and welfare system. The initial immigrant-native earnings gaps are large. While longterm immigrants experience a rapid earnings growth, only men from OECD countries converge to natives' earnings. Among all immigrant groups earnings grow predominantly due to improving employment rates rather than wage growth. Earnings profiles for temporary immigrants are flat. Furthermore, direct study of the use of social benefits suggests that immigrants learn to use the welfare system gradually. In particular, non-OECD households substantially increase their use of social assistance during their first five years in the country despite simultaneously doubling their earnings. JEL classification: J61, J31, F22

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 113 (2011)
Issue (Month): 3 (09)
Pages: 665-688

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Handle: RePEc:bla:scandj:v:113:y:2011:i:3:p:665-688

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References

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  1. Dustmann, C, 1993. "Earnings Adjustment of Temporary Migrants," Journal of Population Economics, Springer, vol. 6(2), pages 153-68, May.
  2. Borjas, George J & Hilton, Lynette, 1996. "Immigration and the Welfare State: Immigrant Participation in Means-Tested Entitlement Programs," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 575-604, May.
  3. Darren Lubotsky, 2007. "Chutes or Ladders? A Longitudinal Analysis of Immigrant Earnings," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 820-867, October.
  4. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
  5. Erling Barth & Bernt Bratsberg & Oddbj¯rn Raaum, 2004. "Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 1-22, 03.
  6. Wei-Yin Hu, 2000. "Immigrant Earnings Assimilation: Estimates from Longitudinal Data," American Economic Review, American Economic Association, vol. 90(2), pages 368-372, May.
  7. Antecol, Heather & Kuhn, Peter J. & Trejo, Stephen, 2003. "Assimilation via Prices or Quantities? Labor Market Institutions and Immigrant Earnings Growth in Australia, Canada, and the United States," IZA Discussion Papers 802, Institute for the Study of Labor (IZA).
  8. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  9. Olivier Bargain & Herwig Immervollz & Heikki Viitamäkix, 2007. "How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data," Working Papers 200727, Geary Institute, University College Dublin.
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Cited by:
  1. Mari Kangasniemi & Merja Kauhanen, 2013. "Who leaves and who stays? Outmigration of Estonian immigrants from Finland and its impact on economic assimilation of Estonian immigrants in Finland," Norface Discussion Paper Series 2013001, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Christian Dustmann & Joseph-Simon Görlach, 2014. "Selective Outmigration and the Estimation of Immigrants’ Earnings Profiles," Norface Discussion Paper Series 2014002, Norface Research Programme on Migration, Department of Economics, University College London.
  3. Barth, Erling & Bratsberg, Bernt & Raaum, Oddbjørn, 2012. "Immigrant wage profiles within and between establishments," Labour Economics, Elsevier, vol. 19(4), pages 541-556.
  4. Ian Preston, 2013. "The Effect of Immigration on Public Finances," CReAM Discussion Paper Series 1323, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Bratsberg, Bernt & Raaum, Oddbjørn & Røed, Knut, 2011. "Educating Children of Immigrants: Closing the Gap in Norwegian Schools," IZA Discussion Papers 6138, Institute for the Study of Labor (IZA).

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