The Dynamics of Immigrant Welfare and Labor Market Behavior

Jorgen Hansen and Magnus Lofstrom

No 360, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes transitions into and out of 3 different labor market states, social assistance, unemployment and employment. We estimate a dynamic multinomial logit model, controlling for endogenous initial condition and unobserved heterogeneity, using a large representative Swedish panel data set, LINDA, for the years 1990 to 1996. The unadjusted data indicates that immigrants are more likely to receive both social assistance and unemployment compensation than natives. Immigrants are less likely to remain employed in consecutive years than natives and are more likely to stay on welfare and to receive unemployment insurance in a year, given participation in the previous year. The empirical results suggest that refugee immigrants display a greater degree of "structural" state dependence than natives. Further, immigrants from non-refugee countries display a similar degree of "structural" state dependence as natives. The high welfare participation rates among refugee immigrants seem to be due to the existence of a "welfare trap", while participation among natives and non-refugee immigrants is largely due to permanent unobserved characteristics. These results suggest that welfare reforms will have differential effects on refugee immigrants and natives.

Keywords: Welfare; labor market behavior; transition; state dependence; immigration (search for similar items in EconPapers)
JEL-codes: I30 I38 J15 J18 J61 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2001-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published - published in: Journal of Population Economics, 2009, 22 (4), 941 - 970

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Related works:
Journal Article: The dynamics of immigrant welfare and labor market behavior (2009)
Working Paper: The Dynamics of Immigrant Welfare and Labour Market Behaviour (2001)
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