What explains immigrant–native gaps in European labor markets: The role of institutions

Abstract

The understanding of how institutional and policy contexts affect immigrant integration is essential for any effort to foster a sustainable and effective migration and integration policy framework. Immigrant-native labor market gaps may arise not only due to differences in human capital or other socio-economic and demographic characteristics, but also due to differentiated impacts of institutions and policies on otherwise similar immigrants and natives. Different integration policy approaches are needed to close the gaps arising through these different mechanisms. This article exploits the variation across Europe to study the institutional and policy determinants of immigrant-native gaps in host labor markets. Using the EU Labor Source Survey as the primary source of data and a novel analytical approach, we study immigrant-native gaps in labor force participation, unemployment, low-skilled employment and temporary employment, and measure the contribution of institutional and policy contexts to the part of these gaps that cannot be explained by immigrant-native differences in characteristics. Our findings confirm that institutional and policy contexts play a significant role in immigrant integration, and highlight the importance of tailoring policy approaches with regard to the causes of immigrant-native gaps.

The contextual cogs of “migrant jobs”: A comparative study of the institutional determinants of migrant marginalization in European labor markets

“…At the same time, they find considerable gaps where the welfare state is lean and labor market deregulated-highlighting how the effect of certain institutions are conditional on others'. The institutional component of migrant marginalization in the labor market (whose empirical existence is more strongly established) is under-theorized, and most work grappling with it has thus far focused on single policy areas, despite the above-mentioned emphasis on institutional fields overlapping and interacting to bring about these outcomes (Guzi et al, 2021). Some have studied institutional effects on migrant employment and unemployment rates (e.g., Huber, 2015), but as has been shown in above works illustrating the often bleak and exploitative situation for working migrants, just being employed doesn't assure sufficient quality of life or security.…”

“…Some have studied institutional effects on migrant employment and unemployment rates (e.g., Huber, 2015), but as has been shown in above works illustrating the often bleak and exploitative situation for working migrants, just being employed doesn't assure sufficient quality of life or security. Two recent studies largely using a Varieties of Capitalism (VoC) framework have directly investigated institutional effects on migrant-native gaps in labor market outcomes, beyond individual-level composition (Guzi et al, 2021;García-Serrano and Hernanz, 2022). In terms of job quality, García-Serrano and Hernanz found more coordinated wage bargaining, union presence, and stricter EPL tended to disadvantage migrants vis-à-vis natives, while integration policies and government involvement in minimum wage reduced these gaps (García-Serrano and Hernanz, 2022).…”

“…They also emphasized that the same policy wont bring identical results, but must be adapted for national contexts (García-Serrano and Hernanz, 2022). Guzi et al found that EPL increases the gap between migrants and natives in terms of low-skill employment, while certain welfare spending measures decreased outcome gaps (Guzi et al, 2021). These works make great strides in advancing this field of knowledge, but in their use of frequentist statistical methods, potentially leave some of the complex interaction of institutional factors unexplored (Ragin, 2010).…”

“…While this could be included in the models calculating countries' marginalization scores, the extent of the low-skill sector in a country is actively shaped by states' economic, industrial and other policy, and is an interesting factor in itself; and so was included as a causal condition. Given that the particular low-skill industries or sectors that are prevalent in European countries differ, including sectors defined in a more absolute or concrete sense (e.g., size of the hospitality, agriculture, manufacturing industry) in the QCA analysis is not possible for such a wide assortment of economies (Devitt, 2011;Cangiano, 2012;World Bank, 2020;Guzi et al, 2021). To capture the importance of low-skill employment and simultaneously allow for the fact that the particular low-skill sectors that prevail differ across countries, the percentage of low-skill jobs in each country was calculated using the EU-LFS (ISCO 5 and 9 jobs as percentage of total employment, following Andersson et al (2019) and the (OECD, 2019b).…”

“…This paper follows critiques of human capital and neoclassical approaches that overly focus on skill levels and supply-side factors and miss the importance of demand-side effects that shape labor market dynamics (e.g., Rubery, 2007;Grimshaw et al, 2017). Within the narrower but undertheorized frame of migrants' labor market and poverty outcomes, it has been shown that we need to go beyond mere migrant composition to explain their socioeconomic position, and also consider the broader institutional context (Büchel and Frick, 2005;Barrett and Maître, 2013;Hooijer and Picot, 2015;Eugster, 2018;Guzi et al, 2021;Krings, 2021;García-Serrano and Hernanz, 2022).…”