Published: June 25, 2020

A new Life Course Centre Working Paper investigates why established refugee workers continue to have lower salaries than comparable native-born workers.

The topic is explored via the case study of Sweden, which has a refugee-friendly migration policy, a large share of the population with a refugee background, and allows asylum seekers to work immediately after applying for refugee status. The study uses Swedish employer-employee data to compare the wages of established refugee workers to Swedish-born workers, following 100,000 refugee workers who entered Sweden before 1997 over their labour market trajectory from 2003-2013.

The paper is authored by Life Course Centre Research Affiliate Professor Christopher F. Baum of Boston College, Professor Hans Lööf Centre of KTH Royal Institute of Technology, Stockholm, Professor Andreas Stephan of Jönköping University, Sweden, and Professor Klaus F. Zimmermann of the United Nations University – Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT) in The Netherlands.

Previous research has shown that refugee migrants integrate slowly into the labour market and have lower wages than native workers during their adjustment period. This new study shows a continued observed wage gap between established refugees and comparable native workers, mainly caused by occupational sorting into cognitive and manual tasks. Refugee workers are more likely to work in one of two manual task groups, where they tend to remain. Within occupational categories, the wage gap is largely explained by differences in work experience, which is on average a four-year difference. A sizeable wage gap remains unexplained, which may reflect unmeasured personal characteristics or institutional constraints on occupational mobility.

These findings have important policy implications for income inequality and economic efficiency, including the wage differentials and occupational mobility of high and low-skilled workers. With companies raising concerns of difficulties in recruiting competent and qualified personnel, refugee workers may have unexploited skill potentials that could help to reduce shortages of skilled labour in many developed economies.

You can read the full Working Paper, ‘Occupational Sorting and Wage Gaps of Refugees’, here.