Labor Market Outcomes of Natives and Immigrants: Evidence from the ECHP

Almost all Western European countries are experiencing an increasing inflow of immigrants. At the same time, however, the countries of Western Europe are also experiencing other important demographic changes, as they all are ageing population societies. A key issue, therefore, is how the combined effect of these demographic changes affects labor market outcomes. In this paper we analyze the evidence provided by the European Community Household Panel (ECHP), a longitudinal household survey organized and coordinated by Eurostat, which covers a wide range of topics, giving comparable information across the member-states of the European Union before the 2004 enlargement (EU-15). Our goal is to provide a detailed description of labor market outcomes (activity rates, employment rates, unemployment rates, and earnings) for those countries for which reliable data are available, distinguishing between natives and immigrants, and conditioning on a variety of personal characteristics, such as gender, age, birth cohort, education, marital status, and the length of stay in the country of current residence. In particular, we ask two questions that we consider important. First, we ask whether there are significant differences in labor market outcomes of natives and immigrants and to what extent these differences may be accounted for by differences in the observed characteristics of the two groups. Second, we ask whether there is evidence of integration of immigrants into the labor markets of Western European countries. More precisely, we ask how much of the residual differences in labor market outcomes of natives and immigrants, namely those differences that are not accounted for by differences in observed characteristics, persist after a sufficiently long residence of immigrants in the host country. The remainder of the paper is organized as follows. After a brief review of the literature in Section 2, Section 3 describes the ECHP data. Section 4 presents some descriptive statistics. Section 5 presents the results of our regression analysis. Finally, Section 6 offers some conclusions.