At the Lower End of the Table: Determinants of Poverty among Immigrants to Denmark and Sweden

Abstract

Abstract In this paper we study determinants of relative poverty among immigrants and natives in Denmark and Sweden during the 1980s and 1990s. Denmark and Sweden share the same properties in a range of labour-market and welfare-state characteristics. At the same time, they differ very much in cyclical profiles and immigration experiences during recent decades. Both countries have followed the same principles regarding immigration policy, i.e. immigration from low-income countries has been restricted to tied movers and refugees. We use 60 percent of the median in the distribution of equivalent disposable income as the poverty line. Data comes from two large panels based on administrative data. We find that immigrants have higher poverty rates than natives in both countries and that this difference has clearly increased in both countries. The paper reports results based on running probability models of poverty incidence. Explanatory variables include years since immigration, demographic characteristics and country of origin. We conclude that a significant part of the difference in aggregate immigrant poverty rates reflects differences in composition by country of origin and differences in the structure of benefits to families with children. Keywords: PovertyImmigrantsPanel DataDenmarkSweden David Skovmand and Anette K. Jensen have been very efficient research assistants. An earlier version of the paper was presented at a workshop in R⊘rvig, April 2004. Comments from the workshop discussant, Jens Clausen, and other participants, from participants at a seminar at the Department of Economics, University of Aarhus, and from two JEMS referees are gratefully acknowledged. Notes 1. The group of more-developed countries consists of all European countries excluding Turkey, Cyprus and a number of former Soviet republics, plus the United States, Canada, Japan, Australia and New Zealand. See Poulsen and Lange (1998). 2. The classification defines non-Western countries as being those outside the small group of rich OECD countries consisting of the EU countries prior to the 2004 enlargement, USA, Canada, Australia, New Zealand and Japan. This classification is also used in Schultz-Nielsen et al. (Citation2001) and in Wadensjö and Orrje (Citation2002). 3. Country categories may differ slightly between Sweden and Denmark. Immigrants are defined as being born abroad with parents who are foreign citizens. 4. In the present study we restrict the analyses of Swedish data to the period ending in 1997 which was the last year available when the study was made. We start the analysis from 1984 as, from that year, disposable income is measured more accurately than before. 5. The absolute level of the low-income line in nominal terms is 60,100 SEK (6,421 euro), and 72,144 DKK (9,669 euro) in 1997. Additional informationNotes on contributorsKræn Blume Kræn Blume is a Researcher at the Institute for Local Government Studies, Copenhagen Björn Gustafsson Björn Gustafsson is Professor and Research Fellow in the Department of Social Work, University of Gothenburg Peder J. Pedersen Peder J. Pedersen is Professor of Economics at the University of Aarhus Mette Verner Mette Verner is Professor of Economics at the Aarhus School of Business