CAFO Working Papers,
Linnaeus University, Centre for Labour Market Policy Research (CAFO), School of Business and Economics

Abstract: The aim of this article is to analyse the impact of human capital variables on the probability for young people of being included in and excluded from the labour market. Of special interest is to study the causal effects of having immigrant background, controlling for other individual characteristics such as age, sex, education, being breadwinner, parental income, and parental employment. The research questions are investigated by using data from Statistics Sweden on young people’s sources and levels of income. The population consists of 18–24 year olds in the county of Kronoberg in southern Sweden. The period covered by the study is 1997–2007. We estimate the impact of individual characteristics by means of both panel data analysis and cross-section analysis. We find that there is a strong association between not having completed compulsory school and being excluded from the labour market. When control-ling for other human capital variables we can not, however, argue that being immigrant or having immigrant parents considerably increases the probability of labour market exclusion. On the other hand, our results clearly testify that having foreign-born parents reduces the probability of being included in the labour market. It can be assumed that this is a consequence of young people with immigrant parents being disadvantaged compared to native youth as regards access to a social network that can be benefited from in the job search proc-ess. Thus, immigrant background chiefly is an obstacle to being included in the Swedish labour market and of less importance for the risk of labour market exclusion. In the respects mentioned here, the results of the panel data analysis corresponds qualitatively with those of the cross-section analysis.

Keywords: Human capital; Immigration; Labour market inclusion

JEL-codes: E24

21 pages, November 21, 2010

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