Immigrants’ Economic Performance Across Europe - Does Immigration Policy Matter?

Drawing on panel data from the ECHP, the BHPS and the GSOEP, we compare the economic performance of immigrants to Great Britain, West Germany, Denmark, Luxembourg, Ireland, Italy, Spain and Austria to that of the respective indigenous population. Economic performance is measured in terms of the country-specific pre-government income position and change in the relative income position due to redistribution processes within the respective tax and social security systems. Our work is based on the premise that countries may be categorized –similarly to the categorization concept of welfare regimes– according to the nature of their immigration policy. Our basic premise is that a successful and integrative immigration policy should result in a non-significant differential between the economic performance of immigrants and that of the indigenous population. Our results show, however, that this “ideal” is not attained in all of the analysed countries, particularly in Germany and Denmark, where the economic performance of immigrants is much lower than that of the indigenous population. GLS random-effects models show that the substantial cross-country differences in the immigrant/native-born performance differential persist, even when controlling in detail for the social structure and level of integration of immigrants. This suggests that not only the conditions of entry to a country impact on immigrants’ economic performance, but also country-specific institutional aspects such as restrictions on access to the labour market and parts of the social security system that are related to citizenship or immigrant status. There still is a great deal of heterogeneity across EU member states in this respect. This should be taken into account when working towards the harmonization of national EU immigration policies.