Do Immigrants Suffer More From Job Loss? Unemployment and Subjective Well-being in Germany

Abstract

This study asks whether immigrants suffer more from unemployment than German natives. Differences between these groups in pre-unemployment characteristics, the type of the transition into unemployment, and the consequences of this transition suggest that factors intensifying the negative impact of unemployment on subjective well-being are more concentrated in immigrants than in natives. Based on longitudinal data from the German Socio-Economic Panel Study (1990–2014; N = 34,767 persons aged 20 to 64; N = 210,930 person-years), we used fixed-effects models to trace within-person change in subjective well-being across the transition from employment into unemployment and over several years of continued unemployment. Results showed that immigrants’ average declines in subjective well-being exceeded those of natives. Further analyses revealed gender interactions. Among women, declines were smaller and similar among immigrants and natives. Among men, declines were larger and differed between immigrants and natives. Immigrant men showed the largest declines, amounting to one standard deviation of within-person change over time in subjective well-being. Normative, social, and economic factors did not explain these disproportionate declines. We discuss alternative explanations for why immigrant men are most vulnerable to the adverse effects of unemployment in Germany.

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Fig. 1

Notes

  1. 1.

    We additionally estimated all models based on a more restricted age range of 25 to 55 because labor force attachment may be lower at the upper end of the age scale and also among the youngest workers in the apprenticeship system. These analyses yielded similar results.

  2. 2.

    In additional analyses, we used a less restrictive definition of the control sample, including all person-years in employment. Results for this definition were nearly identical to those presented in this article.

  3. 3.

    Not all transitions out of employment were transitions to unemployment. Other types included transitions to early retirement, parental leave, sickness leave, and quitting work without looking for a new job. Of all transitions out of employment observed in our sample, 53.5 % were transitions to unemployment (61.2 % among immigrants and 51.2 % among natives).

  4. 4.

    Germany’s dual system of vocational training combines on-the-job training in firm-based apprenticeships with schooling. Apprentices work in their firm for up to 40 hours weekly, rendering them more similar to respondents who are employed than to respondents in other forms of education (e.g., secondary comprehensive schooling or university).

  5. 5.

    Our yearly data did not allow us to identify the exact timing of the transition into unemployment, or whether longer periods of unemployment were interrupted by shorter employment spells.

  6. 6.

    We used more differentiated variables to capture the provider role in more detail. These included more detailed measures for children at different ages and measures for number of children in different age groups. None of these specifications influenced the effects of unemployment beyond what was captured by a simple dummy variable for having at least one child younger than age 15. Therefore, we opted for this parsimonious specification.

  7. 7.

    We did not include dummy variables for calendar years because these would be fully collinear with respondents’ age in the fixed-effects models, in which birth cohort—a time-invariant variable—is fixed by definition.

  8. 8.

    We also included three-way interactions among the age terms, immigrant status, and sample status (event or non-event sample). All parameter estimates for unemployment effects remained almost identical under this specification. Therefore, we used the more parsimonious model including only the two-way interactions between age and immigrant status.

  9. 9.

    Individuals with only one observation were excluded from these models. This restriction did not apply to the event samples, in which every respondent was observed at least twice. In the control samples, approximately 20 % of respondents were observed only once. These respondents did not differ compositionally from the remaining control samples, except for the proportion of married and single people. Respondents observed only once were less likely to be married and more likely to be single.

  10. 10.

    As an example, consider individual i who is unemployed between one and two years at time t. For this individual, the second dummy variable denoting two years in unemployment equals 1, \( {D}_{it}^{k = 1}=1 \), and δ k = 1 captures the well-being effect of this dummy variable, while the other two dummy variables equal 0, \( {D}_{it}^{k = 0}=0 \) and \( {D}_{it}^{k = {2}^{+}}=0 \). If that individual remains unemployed in the following year (t + 1), the set of unemployment dummy variables for this individual changes to \( {D}_{i,t + 1}^{k = {2}^{+}}=1 \), and \( {D}_{i,t + 1}^{k\ \ne\ {2}^{+}}=0 \). For continuously employed respondents in the control sample, all unemployment dummy variables equal 0 at all time points.

  11. 11.

    The standard deviation of within-person change over time in subjective well-being was 1.13 across all observations in our analytic sample (N = 210,930).

  12. 12.

    Measured by the percentage reduction in the coefficient for the interaction between immigrant status and the dummy variable for more than two years in unemployment in Model 3 compared with Model 2.

  13. 13.

    Numbers sum to 100.1 % because of rounding.

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Acknowledgments

Replication files and supplementary material are available at the authors’ websites (http://www.liliyaleopold.com, http://www.thomasleopold.eu, and http://www.clemenslechner.eu). We thank Thijs Bol, Irena Kogan, and seminar participants at the University of Amsterdam for their comments on earlier versions of this article.

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Leopold, L., Leopold, T. & Lechner, C.M. Do Immigrants Suffer More From Job Loss? Unemployment and Subjective Well-being in Germany. Demography 54, 231–257 (2017). https://doi.org/10.1007/s13524-016-0539-x

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Keywords

  • Unemployment
  • Immigrants and natives
  • Subjective well-being
  • Panel data
  • Fixed-effects models