The Nordic Labor Market and Migration

Abstract

The large influx of migrants to Nordic countries in recent years is challenging the adoptability of Nordic labor market institutions while also adding to potential growth. This paper examines the trends, economic drivers, and labor market implications of migration to Nordic countries with a particular focus on economic migration as distinct from the recent large flows of asylum seekers. Our analysis finds that migration inflows to the Nordics are influenced by both cyclical and structural factors. Although migration helpfully dampens overheating pressures during periods of strong demand, and over the longer term will cushion the decline in labor supply from population aging, in the near-term unemployment can rise, especially among the young and lower-skilled. The analysis highlights the need to adapt Nordic labor market institutions in a manner that better facilitates the integration of migrants into employment. In particular, greater wage flexibility at the firm level and continued strong active labor market measures will help improve labor market outcomes among immigrants.

Between Numbers and Political Drivers: What Matters in Policy-Making

“…Conversely, other scholars (Rinne 2013) conclude that interventions such as work experience and wage subsidy programmes seem most effective: "programs that are relatively closely linked to the labor market (for example, work experience and wage subsidies) appear the comparatively most effective programs" (Rinne 2013: 548). In Nordic countries, Ho and Shirono (2015) find that the estimated effects of active labour market programme spending are much higher on foreign-born unemployment than on native-born unemployment (although the latter is also reduced), so that the foreign-native gap is narrowed as a result. Furthermore, Nagayoshi and Hjerm (2015) discover that labour market policies in the form of activation policies affect attitudes toward immigration.…”

Adjustment in international work contexts: Insights from self‐initiated expatriates in academia

“…On the societal level, Denmark provides an interesting context to study in how far the administrative structure of labor migration policies can influence certain flows of migration. Within the past few decades, the country has had a substantial influx of migrants (Ho & Shirono, ). The regulations of Danish labor migration for highly skilled workers, as well as favorable tax schemes for international researchers and highly paid individuals employed in Denmark (SKAT, ), show that the administrative structure is encouraging highly skilled foreign workers to enter the Danish job market.…”

Germany After “Migration Crisis”: Economy, Politics, and Society

“…In addition, long-term income differences and network migration (that is, the fact that there is already a stock of migrants from certain countries) play an important role, especially for non-Nordic EU labor migrants. Other, non-economic factors at work include flows of asylum seekers and migrants for family reunification purpose (see Ho and Shirono (2015) for more detail).…”

“…Geographical mobility by migrants can help the EU adjust to asymmetric shocks, ultimately helping growth. For example, cross-border migration is an important part of economic adjustment within the Nordic region (Ho and Shirono, 2015). And international experience (notably from the United States) suggests that immigrants are one of the most geographically mobile parts of the population, and that they help balance the labor market when asymmetric shocks take place (Cadena and Kovac, forthcoming).…”