Immigrants’ contribution and share: Multilevel analysis of migrant labour contribution to productivity, welfare and income in Finland

Abstract

In this paper we investigate how economic growth and productivity, when adjusted for the influence of welfare state institutions, affects the redistribution of incomes for employed immigrants and natives in Finland. We used the European Union Statistics on Income and Living Conditions (EU-SILC) cross-sectional data for the period from 2004 to 2016 selected for Finland. Based on multilevel modelling and an aggregate production function approach, we calculate the elasticity estimates for incomes as adjusted for the influence of education, occupation and industry and social benefits. The results indicate high differentiation of incomes between immigrants and natives, while showing lower incomes for immigrants. Social benefits slightly decrease incomes, while for immigrants this negative effect is even more pronounced than it is for natives. Economic growth and increase in productivity is associated with an increase in the incomes of both immigrants and natives with low and medium education and of clerical and manual labour occupations among immigrants. Despite the widespread perception that ‘immigrant hordes’ have an adverse effect on the employment opportunities of natives and their incomes, the research concludes that welfare state benefits in combination with the influence from macroeconomic regulators and productivity increase incomes for immigrants.