Earnings dynamics of immigrants and natives in Sweden 1985–2016

Benjamin Friedrich, Lisa Laun and Costas Meghir
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Benjamin Friedrich: Northwestern University, Kellogg School of Management., Postal: Northwestern University, Kellogg School of Management.
Costas Meghir: Yale University, Postal: Yale University

No 2021:15, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper analyzes earnings inequality and earnings dynamics in Sweden over 1985–2016. The deep recession in the early 1990s marks a historic turning point with a massive increase in earnings inequality and earnings volatility, and the impact of the recession and the recovery from it lasted for decades. In the aftermath of the recession, we find steady growth in real earnings across the entire distribution for men and women and decreasing inequality over more than 20 years. Despite the positive trend, large gender differences in earnings dynamics persist. While earnings growth for men is more closely tied to the business cycle, women face much higher volatility overall. Earnings volatility is also substantially higher among foreign-born workers, reflecting weaker labor market attachment and high risk of large negative shocks for low-income immigrants. We document an important role of social benefits usage for the overall trends and for differences across sub-populations. Higher benefits enrollment, especially for women and immigrants, is associated with higher earnings volatility. As the generosity and usage of benefit programs declined over time, we find stronger earnings growth among low-income workers, consistent with higher self-sufficiency.

Keywords: Earnings inequality; earnings volatility; immigration; social insurance (search for similar items in EconPapers)
JEL-codes: D31 E24 J15 J31 J61 (search for similar items in EconPapers)
Pages: 91 pages
Date: 2021-11-09
New Economics Papers: this item is included in nep-dem, nep-ias, nep-lab, nep-mac and nep-mig
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Journal Article: Earnings dynamics of immigrants and natives in Sweden 1985–2016 (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2021_015

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