The Economic Return to Labour Market Experience of Immigrants in Sweden

Abstract

This study focuses on the value that employers assign to immigrants’ labour market experience, from both before and after immigration, using a surveyed representative sample of the Swedish immigrant and native populations. A novel feature of the survey is that it contains a measure of immigrants’ actual years of labour market experience, including about work before immigration. Previous research has, in contrast, relied on so-called potential measures, risking bias in the analyses. For immigrants, results show that only pre-immigration labour market experience from the Nordic countries has a positive return. Results also show that return to labour market experience after immigration does not depend on whether the individual acquired Sweden-specific human capital before or with the entry into the labour market. Natives and immigrants, as well as immigrants with and without schooling or upbringing in Sweden, have parallel wage trajectories across labour market experience years, with immigrants being at a stable disadvantage. This is interpreted to be caused by immigrants being sorted into jobs with worse opportunities to acquire new human capital compared with natives.