Unemployment‐Risk Differentials Between Immigrant and Native Workers in Sweden

Abstract

This article analyzes the subsequent unemployment risk of a sample of Swedish employees in 1991. We find that non‐European immigrants face an unemployment risk twice as large as the corresponding risk for native workers despite controls for employee characteristics, the 1991 wage rate, and sorting across establishments with varying unemployment risks. Although all employees enjoy higher job security with higher seniority, large differences in unemployment risk by region of birth remain for workers with similar seniority levels. This suggests that labor unions and employers deviate from seniority rules established by the Swedish Security of Employment Act in favor of native workers.