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Immigrants' and Natives' Unemployment-risk: Productivity Differentials or Discrimination?

  • Arai, Mahmood

    (FIEF and Department of Economics, Stockholm University)

  • Vilhelmsson, Roger


Studying the unemployment risk during 1992 to 1995 for a sample of employees in 1991, we find that immigrants from the non-European countries run a risk of unemployment that is twice the corresponding risk for the native workers. There exist substantial unemployment-risk differentials taking into account employees’ demographic and human capital characteristics, the wage-rate in 1991 and systematic sorting of workers across establishments associated with varying unemployment risks. Exaggerating beyond all reasonable limits, the ability differentials (measured in school grades and IQ-tests) between immigrants and natives fails to explain the differences between immigrants and natives in unemployment risks. Our simulations indicate that the observed unemployment-risk differentials between native and non-European workers correspond to ability differentials that are at least as large as the whole range of IQ-scores. Our conclusion is that discriminatory behavior and stereotype beliefs must be involved. Furthermore, we report results indicating that the existing income-gap between immigrants and natives in Sweden is almost entirely due to unequal employment opportunities.

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Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 169.

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Length: 27 pages
Date of creation: 15 Aug 2001
Date of revision:
Publication status: Published in Industrial Relations, 2004, pages 690-99.
Handle: RePEc:hhs:fiefwp:0169
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