Private-Sector Wage Subsidies Could Help Unemployed Immigrants Find a Job

Access to the regular labour market is much harder for immigrants than for the native-born population in many European countries. Governments in Europe thus use active labour market policies to support unemployed immigrants. Wage subsidies in the private sector are particularly effective in facilitating the labour market integration of immigrants, while training measures, job search assistance or wage subsidies in the public sector are less suitable to increase immigrants’ employment rates. These are the findings of a meta-analysis conducted by the Centre for European Economic Research (ZEW) in Mannheim. ZEW researchers evaluated 33 scientific studies on the impact of labour market policies on immigrants in Denmark, Finland, Germany, the Netherlands, Norway, Sweden and Switzerland for this analysis.

The findings of the ZEW analysis suggest that the countries examined could improve the effects of their active labour market policies notably. In particular, making use of wage subsidies in the private sector more often could increase the share of employed immigrants. However, this would involve considerable costs.

In many European countries, immigrants are a disadvantaged group on the labour market. They are more likely to be unemployed than the native population. In 2010, the average unemployment rate of immigrants in the European OECD countries was 4.3 percentage points higher than the unemployment rate of the native population. In Germany, this gap was even more pronounced (5.6 per cent).

European governments employ various active labour market policies in order to improve the employment opportunities of immigrants. Measures include language and integration courses, professional training, wage subsidies in the private and public sector as well as job search assistance. Many empirical evaluation studies have examined the effects of individual measures, but there has been no comprehensive review of these individual studies so far. To provide political decision-makers with an overview of particularly advantageous or disadvantageous measures for fostering the labour market integration of immigrants, ZEW condensed the 33 studies available into a meta-analysis.

For further information please contact

Sebastian Butschek, Phone +49(0)621/1235-238, E-mail butschek@zew.de

Dr. Thomas Walter, Phone +49(0)621/1235-363, E-mail walter@zew.de