“Labour Market Outcomes of Immigrants in Denmark: Using or Losing human Capital?”

Joint Paper: Shahamak Rezaei, Chantal Pohl Nielsen & Marco Goli: The presentation will consist of three parts: (1) We will begin by providing a overall description of immigrants'participation in the Danish labour market (i.e. the shares of wage-employed, self-employed and non-employed) as well as a brief overview of the policies relating to employment / unemployment of immigrants (unemployment benefits, incentive structures, financial compensation to firms that employ immigrants in e.g. training positions, etc). (2) Self-employment is the focus of the second part, including a discussion of the use of self-employment as a last resort in response to barriers to entry into the formal labour market. A description of the self-employed based on register data will be provided, including level of education and indications as to whether or not this level of education is commensurate with the line of business the individual is involved in. The earnings of the self-employed are then examined and compared with those of wage-employed and unemployed persons with equivalent levels of education. The short and long run earning potentials of the self-employed are also briefly discussed. This second part of the presentation will be wrapped up by a policy discussion. In addition to the register-based analyses, we hope to be able to include results of a survey that is being conducted at the moment. This survey will provide information on the motivation for becoming self-employed as well as other interesting qualitative information. (3) Wage-employment is the focus of the third part, where we will discuss the extent to which immigrants make use of their skills / education on the formal labour market. Characteristics of over-employed immigrants (i.e. those who are formally overqualified for their job) will be given, including country of origin, subject area of their education, sector of employment, source of their education (home country or Denmark), etc. The consequences of over-education for wages will then be evaluated, using econometric analysis based on register data. We will discuss whether over-education seems to be a temporary or a permanent situation for immigrants, and finally, options for policy intervention will wrap up this part of the presentation.