The Labor Market Outcomes of Immigrants

In several OECD nations, including the United States, immigrants are less likely to be unemployed than people born in the country. For other OECD members, the opposite is true and native-born populations are outperforming migrants in the labor market. While Anglophone countries and Latin American nations tend to produce better outcomes for immigrants concerning unemployment, this rule is not absolute.

According to information in the recently released OECD International Migration Outlook 2023, the unemployment rates of immigrants are below those of native-born populations also in Australia, New Zealand, Chile, Colombia, Costa Rica and Slovakia. The biggest gaps in favor of immigrants were recorded in Costa Rica and Chile, with immigrants' unemployment rate being 1.5 percentage points lower as of the most recently available data.

Latin American countries might lack the social safety nets of more developed nations while at the same time offering more opportunity for and easier access to self-employment and informal labor. Yet, not all of them see immigrants overperform in terms of unemployment. Despite offering most of the same labor market characteristics that might prove beneficial to immigrants, Mexico had a migrant unemployment rate 1.1 percentage points higher than that of native-born Mexicans most recently. While Slovakia saw fewer migrants unemployed than native Slovakians, this wasn't true in neighboring Czechia, Hungary and Poland. Overall, the data shows that gaps in labor market achievement tend to be bigger if unemployment is higher - with Latin America once again the exception as migrants achieve good labor market outcomes here despite high overall unemployment.

The OECD confirms that tight labor markets tend to work in favor of migrants, as do larger city environments. Another factor is a country's immigration policy, where high quotas for work visas can lead to less unemployment of migrants. More rigid labor market regulations and more strictly regulated institutions can also have a negative effect on migrants' unemployment, potentially explaining the situation in Northern and Western European countries. The author of a report out of the United Kingdom points out that discrimination is also contributing to negative labor market outcomes for migrants. Despite still lagging behind in the OECD overall, the unemployment gap of migrants has improved by at least 2.5 percentage points since 2019.