The employment gap between immigrants and natives - the importance of local factors

Sammanfattning: Sweden has once been an emigration country, but as the years went by and as the world is in constant change, it turned into an immigration country. One of the most debated questions politically and economically is the employment gap between immigrants and natives. The available studies have mainly described the employment gap between immigrants and natives by human capital factors and discrimination on the labour market. The goal of this paper is to discover the correlation between the local factors and the employment gap between European, non-European immigrants and natives, on municipality level while controlling for education level and gender. Using data from Statistics Sweden and SKR, and an OLS multiple linear regression, we could capture this effect. The local factors studied are the unemployment rate, share of immigrants, share of low-skilled jobs and the size of the municipality. The overall results suggest that the region of birth does have an impact on the employment gap between immigrants and natives, where the biggest gap is between the non-European immigrants and the natives, which is in line with previous studies. Furthermore, both Europeans’ and non-Europeans’ employment rate is mostly correlated with the municipality size followed by the local unemployment rate. Taking the limitations of this paper into account, these results are only an indication and further studies need to be made to further insure the correlation between the local factors and the employment rate.