Labour market characteristics and their impact on the integration of immigrants' offspring

Abstract

Explanations of the employment differences between children of some groups of immigrants and children of natives can be found on both the supply and the demand side of the labour market. This chapter focuses on the demand side. Three issues are highlighted: Recruiting through networks, discrimination and labour market institutions. Networks play an important role when recruitment and promotion are largely made through informal channels. There are differences between the networks of children of immigrants and children of natives. Compared to children of natives, the children of immigrants on average to a greater extent have unemployed parents and relatives, live in socially disadvantaged neighbourhoods and attend segregated schools. This means that the children of immigrants have less access to networks with links to the labour market and to the most rewarding areas of the labour market. There are several studies showing discrimination against the children of certain groups of immigrants. One reason behind discrimination could be that employers, coworkers and/or customers dislike being in close contact with people from certain minorities. Another source of discrimination is what economists call statistical discrimination, which occurs if information on the individual job seeker's productivity is difficult or costly to obtain. Employers' hiring decisions are in this case based on preconceptions of the average productivity of the group the job seeker seems to belong to, and not on the abilities of the job-seeking individual. Children of some groups of immigrants are ascribed various characteristics that can be attributed to some individuals in the group but not to all. Generalising negative characteristics to every individual in the group contributes to statistical discrimination. Different institutions can counteract the difficulties caused by discrimination and the lack of networks. Educational institutions are important for the transition from school to work. If occupation-specific human capital is provided in the regular educational system, employers are well informed of the potential productivity of an inexperienced job seeker. Young people with credentials from such vocational tracks have an advantage in finding not only a job, but also an appropriate job. The disadvantages are obstacles for the children of immigrants to gain entrance into attractive vocational tracks, in particular to training places at the work place, where there is a risk of discrimination against the children of immigrants or an extensive use of selection through networks. On the other hand, more comprehensive educational systems have the benefit of being less selective, but the disadvantage of giving less informative signals to the labour market. When discrimination and the lack of resourceful networks are obstacles for children of immigrants to gain employment, labour market programmes can improve their chances. Programmes that are very close to the labour market are found to be the most effective in terms of increasing the participants' employment possibilities. Such programmes are wage subsidies in ordinary jobs and labour market training of high quality. Another measure found to be effective is intensified matching and counselling. The important issue is whether the children of immigrants have access to high quality programmes to the same extent as children of natives or if they are overrepresented in programmes that are very far from the labour market. There are some indications that this is the case, but the issue needs further research. The policy implications constitute of measures that compensate for the lack of networks and counteract discrimination. Correspondence testing could be a useful tool to assess the extent of discrimination against children of immigrants. Besides legislation there are a number of other measures, which have in common that they increase the chances of children of immigrants to refute preconceptions about their abilities and give them a chance to demonstrate their true productivity to employers. Educational institutions need to more vigorously involve themselves in the acquisition of apprenticeship and other training places in the ordinary labour market and in the allocation of pupils to these training places. Labour market programmes should be subjected to a systematic use of evaluation methods. Such evaluations should consider how the policy is implemented as well as the labour market outcomes of programme participants. Differences in implementation or in outcomes between the children of immigrants and the children of the native-born should be identified. Education on discrimination and the mechanisms behind should be included in the inservice training at employment offices and schools and be mandatory in all intercultural courses.