The Nordic Labor Market and Migration
IMF Working Papers, December 4, 2015
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Bibliographic details
- Authors: Giang Ho, Kazuko Shirono
- Published: December 4, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513528366.001
Summary
- The large influx of migrants to Nordic countries in recent years is challenging the adoptability of Nordic labor market institutions while also adding to potential growth.
- The paper examines trends, economic drivers, and labor market implications of migration to Nordic countries with a particular focus on economic migration as distinct from recent large flows of asylum seekers.
- Migration inflows to the Nordics are influenced by both cyclical and structural factors.
- Migration helps dampen overheating pressures during periods of strong demand and, over the longer term, will cushion the decline in labor supply from population aging.
- In the near-term, unemployment can rise, especially among the young and lower-skilled.
- The analysis highlights the need to adapt Nordic labor market institutions to better facilitate the integration of migrants into employment.
Key findings
- Migration inflows are driven by both cyclical factors and structural factors.
- Short-term effects:
- Migration can dampen overheating pressures during periods of strong demand.
- Near-term unemployment can rise, with especially adverse effects for the young and lower-skilled.
- Long-term effects:
- Migration will cushion the decline in labor supply caused by population aging.
- Institutional challenges:
- The adoptability of Nordic labor market institutions is being tested by large recent migrant inflows.
Policy recommendations
- Facilitate migrant integration into employment by adapting labor market institutions.
- Increase wage flexibility at the firm level to improve labor market outcomes among immigrants.
- Continue strong active labor market measures to support immigrant employment.