Transcript title author date place

Ethnic Diversity
in European Labor Markets
Klaus F. Zimmermann
IZA, DIW Berlin and University of Bonn
Budapest
October 22, 2010
Background
• Social and economic exclusion remains an everyday challenge to
millions of members of ethnic minorities living in Europe today
• Underlying differences between ethnic minorities and majority
populations often correlate with gaps in their labor market outcomes
• Being a member of an ethnic minority per se often bears a
disadvantage in terms of relative labor market outcomes
• Integration challenges appear in a variety of forms:
– Unequal access to health care
– Unequal access to social services
– Underemployment
– Wage gaps
– And in particular: labor market segmentation
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Challenges for the Analysis of Ethnic Minorities
• Ethnic minorities still insufficiently covered by empirical research
• Cross-country comparisons of economic conditions often
uninformative and biased
• Explanations:
– Scarcity of quantitative and qualitative data of sufficient quality
to allow cross-country comparisons
– Different understandings of the term ‘ethnic minority’
– (Matters further complicated by countries using different
empirical definitions of what it means to be an ethnic minority)
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Outline of this Presentation
1) Definition and measurement of ethnic minorities
2) Previous empirical research
3) Analyzing interethnic gaps in labor market outcomes
in Europe:
a) based on aggregate statistics
b) based on individual data and an econometric model
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Definition of “Ethnic Minorities”
• Ethnic minorities can be defined as...
– groups exhibiting cultural preferences different to those of the
majority population
– groups with different cultural and societal origins
• But empirical research often refers to ethnic minorities as...
– groups born in a different country
– groups with a different citizenship
– groups with different racial background
• This can lead to discrepancies and the omission of data:
– Naturalized immigrants
– Autochthonous minorities
– Second and third generation immigrants
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Deeply Rooted Measurement Problems
• Those issues are especially relevant in some Eastern European
countries:
– “Nationality” has the meaning of ethnicity, or belonging to a
national group (but not synonym for citizenship)
– Low availability of socio-economic indicators in the data
• Altogether, there are deeply rooted measurement problems
• Those can be at least partly addressed by adopting a broad and
flexible understanding of ethnic minorities that encompasses...
– all categories of the population of foreign origin
(i.e., first, second and third generation immigrants),
– ethnic minorities, national minorities, linguistic minorities,
religious minorities, and stateless people
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Previous Empirical Research: Overview
Overall picture:
Robust evidence of the presence of labor market disadvantages
for ethnic minorities in many European countries in terms of...
– higher unemployment rates
– lower labor income (conditional on employment)
– greater barriers to finding work
– lower probability to stay employed (conditional on employment)
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Foreign Origin vs. Foreign Citizenship
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Analysis in the enlarged EU shows a differentiated picture
across its member states (Kahanec and Zaiceva, 2009):
– 15 old member states:
Primarily immigrant status which is associated with
employment and earnings penalties
– New member states:
Citizenship is a relatively more important factor
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European Country-level Evidence
• Immigrant-native gaps in labor market outcomes documented
for a large number of countries:
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Germany (Constant and Massey, 2003)
Spain (Amuedo-Dorantes and de la Rica, 2007)
The Netherlands (van Ours and Veenman, 2005)
France (Aeberhardt et al., 2009; Constant, 2005)
United Kingdom (Simpson et al., 2006; Wheatley Price, 2001;
Dustmann et al., 2003; Kahanec and Mendola, 2009)
Denmark (Pedersen, 2005, 2006; Nielsen et al., 2004)
Hungary (Kertési, 2004; Kertési and Kézdi, 2009)
Slovakia (Vašečka, 2001)
Latvia (Hazans, 2007; Hazans et al., 2007)
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Immigrant-Native Gaps: Some Important Findings
European country-level evidence shows (among other things):
• Extent of gaps varies by gender
• Gaps are heterogeneous across minority groups
• Gaps are in general not decreasing over immigrant
generations, and sometimes even increasing for particular
minority groups (e.g., Black African minorities in France)
• Social ties and social networks are important:
– with co-ethnics for self-employment
– across ethnic boundaries for wage employment
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Explaining Immigrant-Native Gaps
Explanations for the immigrant-native gaps which are present:
• Lower educational attainment, differences in human capital
• Insufficient language skills
• Non-transferability of skills
• Discrimination
• Selection effects (of migration)
• Differences in social or ethnic capital
• Differences in other unobserved characteristics
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Data: Ethnic Minorities in the EU Labor Market
• The meta-analysis of the available EU-wide harmonized individual
data (ESS, EU LFS, EU SILC, ECHP) reveals the lack of data
disaggregated by ethnicity
– Either not available at all, not available due to anonymity,
or the number of observations is too small
To empirically examine the situation of immigrant ethnic minorities...
– Data from the 2007 wave of the EU Labor Force Survey is used
– Minorities are defined by foreign origin or citizenship, across
European destinations
– Two measures of labor market outcomes are investigated:
– Labor force participation rates
– Unemployment rates
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Outcome Variables and Sample
• Outcome variables:
• Labor force participation rate:
proportion of the total working-age population which belongs to
the labor force (i.e., employed or unemployed) in a given year
• Unemployment rate:
proportion of individuals who are unemployed in the labor force
Interpretation of the differentials in these rates vis-à-vis natives
and nationals, respectively, as measures of integration
• Sample:
• Working-age population (15 to 64 years)
• Excluding those in compulsory military service or
regular education
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Empirical Findings: Participation Rates
Participation rates by citizenship and immigration status:
• Nationals or native-born:
• Lowest participation rates in Hungary
• Highest participation rates in Sweden
• Gender differences:
• Lower participation rate for women in all member states
• Foreigner-native gaps:
• Gaps in participation rates prevail across the EU
• However, in several countries, mainly from Southern Europe
or the group of new member states, the proportion of non-EU
foreign-born or non-EU nationals participating in the labor
force is higher than for the corresponding native groups
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Empirical Findings: Participation Rates of Foreigners
• Similarly to natives, among foreigners the participation rate of
women in the labor force is lower than for men
• However, in several Eastern as well as Southern European
member states the proportion of foreign women is higher than
the proportion of native women participating in the labor force
• Comparing Non-EU foreign-born with fewer than five
and more than five years of residence in the host country,
in most countries experience in the host society implies
catching up in terms of labor market attachment (exceptions
include the UK)
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Empirical Findings: Unemployment Rates
Unemployment rates by citizenship and immigration status:
• Nationals or native-born:
• Highest unemployment rate in in Slovakia and Poland
• Lowest unemployment rate in the Netherlands
• Gender differences:
• For natives, unemployment rates of women are usually
higher than those of men (exceptions: Estonia, Ireland,
Latvia, Lithuania Romania, Sweden and the UK)
• Foreigner-native gaps:
• Being a foreigner results in a higher unemployment likelihood
• Experience in the host country seems to improve the ability
of foreigners finding a job
• Female foreigners suffer from higher unemployment rates
more than their male counterparts
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Next Step: Formal Econometric Analysis
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Findings so far not entirely informative
A more formal econometric regression analysis is needed
to disentangle the underlying causes:
– Probit model to explain...
a) the probability of participating in the labor force
b) the probability of employment
– Control for differences in observable characteristics across
groups in these regressions
– Effects of being a foreigner is picked up by a dummy variable
that attains the value of one for foreigners and zero otherwise
– Estimated coefficient for this variable is attributable to the
compound effect of unobserved differences in social and ethnic
capital, discrimination, any other omitted variable, or selection
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Empirical Findings: Econometric Analysis
• Marginal effects of being a foreigner on labor force participation and
unemployment:
– The effect of being a foreigner on labor force participation is by
and large negative both for men and women
– The marginal effects of being a foreigner for unemployment
probability are mainly positive or insignificant across the EU, with
the exception of some Southern European states
– But years since migration in many cases improve the labor
market prospects of the non-EU foreign-born both in terms of
participation and employment
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Empirical Findings: Ethnic Minorities in France
• Definition “immigrant”: older than 10 years upon arrival in France
• Findings:
• Immigrants almost twice as likely to be unemployed than natives
• Same is true for those who were younger then 10 years upon arrival
(“generation 1.5”)
• Second generation men fare worse in the labor market than natives
and fare the worst compared to any ethnic minority of other generations
• Second generation women, with the exception of Moroccan women,
tend to be more economically active and experience lower
unemployment than other female immigrants or “generation 1.5” women
• Mixed second generation (with a parent born in France) are marginally
less active in the labor market and have much lower unemployment
rates compared to other ethnic minorities of foreign origin
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Empirical Findings: Self-identified Ethnic Minorities (1/2)
• Extending the convenient but quite limiting definition based on
foreign origin or citizenship to those who self-identify into an ethnic
minority group
• Data available for three European countries:
– Hungary, Romania, UK
• Comparison between the labor market statistics of the largest ethnic
minorities and their native counterparts
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Empirical Findings: Self-identified Ethnic Minorities (2/2)
• Findings:
– Ethnic minorities in the UK have lower attachments to the labor
market and higher unemployment rates than the white majority
– In Hungary and Romania, non-Roma ethnic minorities fare at
least as well as natives do
– The unemployment rate in Hungary is marginally higher only for
African minorities; for immigrants from China, Croatia, Poland,
Armenia and Arab countries it is substantially lower than for
natives
– The labor participation rate in Hungary is higher for all ethnic
minorities
– Hungarians are marginally less active in the Romanian labor
market than natives, although there is very little difference in
labor market outcomes in Romania for either Hungarians,
Ukrainians or native Romanians
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The Situation of Roma in Spain, Romania and Hungary
• Roma have lived in European countries for hundreds of years and
many generations
• They are still poorly integrated and are considered to be a minority
at high risk of exclusion in almost every country they are present
• The activity rate for Roma is half of that for natives in either country;
the unemployment rate is also much higher
• The unemployment rate for economically active Roma in Hungary is
five times higher than for natives
• The unemployment rate of Roma in Bulgaria, at 77 per cent, is three
times higher than the rate for non-Roma Bulgarians
• The Roma unemployment rate in some Slovakian settlements has
even reached 100 per cent
• Less dramatic disparity between Roma and non-Roma in Spain
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Conclusions
• Worrisome reality of ethnic minorities in Europe
• Although in several countries ethnic minorities exhibit relatively high
participation rates, they appear to face significant difficulties in
finding a job, securing adequate earnings and occupational status
• While a positive role of years since migration is observed, analysis
has not indicated any clear assimilation over immigrant generations
• Importance of tackling the issue of the integration of ethnic
minorities into the whole social fabric
• Gender plays an important role in labor market outcomes:
Important variable that interacts with ethnicity and may drive some
of the interethnic labor market gaps
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Klaus F. Zimmermann
IZA, DIW Berlin and University of Bonn
IZA, P.O. Box 7240,
53072 Bonn, Germany
Phone: +49 (0) 228 - 38 94 - 0
Fax: +49 (0) 228 - 38 94 - 180
Email: [email protected]
www.iza.org