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Assimilation effects on poverty among immigrants in Norway

Abstract

This paper discusses the question of whether or not the high incidence of poverty among immigrants in Norway persists even after immigrants have been in the country for a long period, i.e. after they have had the opportunity to integrate and adapt their skills to the expectations in their new home. While similar to traditional studies of wage assimilation, a study of assimilation in relation to poverty propensity nevertheless measures something different than labor market assimilation, and this represents the main innovation of this study. Analysis of assimilation with respect to poverty focuses on welfare for the lower end of the income distribution and for all individuals, regardless of their relationship with the labor market. It can therefore be seen to better reflect the degree to which immigrants as a whole are able to achieve at least the minimum necessary to participate in the life of their new home and avoid difficulties later on.

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Notes

  1. Hayfron (1998) and Longva and Raaum (2002) as well as the forthcoming paper by Barth et al. (2004) provide results from Norway.

  2. See Borjas and Trejo (1991) and Borjas and Hilton (1996) for analysis of the USA and Baker and Benjamin (1995) for results from Canada.

  3. Lie (2002), pp. 83–95, gives an overview of immigrants' income components, also relative to their time in the country.

  4. In 1997, 17,742 working-age persons were members of households with negative capital income, and 7,106 lived in households with negative labor income. Only 1.8 and 2.0% of those with negative capital income ended up with the classification as poor with the OECD equivalence scale and the square-root scale, respectively, in our analysis. (Equivalence scales will be discussed later in this section.) A much larger portion—approximately one third—of those with negative labor income were classified as poor, but this group only accounted for 2.8 and 2.5% of the poor population with the OECD scale and square-root scale, respectively.

  5. Åserud (2001) used survey data on approximately 10,000 households from Statistics Norway to identify and then model the affinity for having a cohabitant with certain characteristics based, in particular, on level of education and age group. We used the estimated parameters from the model of Åserud (2001) together with address information to predict and simulate cohabitation in the official data on the entire population. Single women and men with the same address who best fit together according to the affinities based on the estimates of Åserud (2001) were then treated as cohabitants in our study.

  6. Unless otherwise stated, tables and figures will be based on own computations.

  7. Disability and old-age pensions generally consist of two parts, a basic pension and a supplementary pension. Immigrants and natives are treated essentially the same with regards to the supplementary pension, the part of the pension which depends on the person's earnings history. The basic (minimum) pension, however, depends on the length of the ‘insured period,’ which for immigrants is the length of time in the country. (For natives it is the length of time since age 16.) A 40 year ‘insured period’ is needed to get the full basic pension.

  8. Up to 3,000 hours for immigrants with no formal education.

  9. Table A.1 in the Appendix provides information on the percentage of working–age persons with even lower income–less than 25% of median annual (equivalent) income after tax. While income that low is extremely rare for natives, large percentages of immigrants do fall into this category for an annual measure of poverty, i.e. based on income from 1 year alone. However, Table A.2, which is based on income from a 3–year period, indicates that persistent income at such a very low level is also very rare among immigrants. (see Poverty defined in terms of 3–year income for further discussion of chronic poverty, i.e. poverty based on income from several years.)

  10. See Fig. A.1 in the Appendix for the probability of poverty relative to age.

  11. The potential for such self-selection appears greatest for Western immigrants; in other words, those immigrants that have the least problems from the start and, thus, are only of limited interest for this study. See Table A.8 in the Appendix.

  12. Migration out of the country occurs mostly for the categories “outside of the labor force” and “unknown.” According to Tysse and Keilman (1998), the former group largely consists of students, whom we have already excluded from our analysis, while the latter group is to a large extent made up of immigrants with such a short duration of stay in Norway that they are never registered with any sort of employment status. The authors suggest that asylum seekers who refused asylum are a major group in this category.

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Acknowledgements

We would like to thank Lars ∅stby as well as two anonymous referees for helpful comments. This research was supported by the Norwegian Ministry of Labour and Government Administration. Ms. Galloway was employed at the Ragnar Frisch Centre for Economic Research during the period when the article was written.

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Correspondence to Taryn Ann Galloway.

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Appendix

Appendix

Fig. A.1
figure 5

The probability of poverty by age and ethnic origin. The predicted probabilities are calculated with the following variables held constant: YSM=10 for immigrants, couple without children, male, high school education

Table A.1 Percentage of working-age populationa with income under 25% of annual median equivalent income after tax in Norway by ethnic origin (1995–1997)
Table A.2 Percentage of working-age populationa in Norway under 25% of median 3-year equivalent income after tax by ethnic origin (1995–1997)
Table A.3 Regression results for probability of being poor in 1997 by ethnic group (square-root scale)
Table A.4 Regression results for probability of being poor in 1997 by ethnic group (OECD scale)
Table A.5 Descriptive statistics on age, years since migration and age at migration by ethnic group in the working-age population
Table A.6 Regression results for chronic poverty by ethnic group (square-root scale)
Table A.7 Regression results for chronic poverty by ethnic group (OECD scale)
Table A.8 Percentage of 1986–1990 immigrant cohorts still residing in Norway as of 1 January 1996 by employment status

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Galloway, T., Aaberge, R. Assimilation effects on poverty among immigrants in Norway. J Popul Econ 18, 691–718 (2005). https://doi.org/10.1007/s00148-005-0002-6

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Keywords

  • Immigration
  • Assimilation
  • Poverty

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