Estimating the relative success of local authorities at labour-market integration of immigrants

We propose a method for estimating indicators of the success of local authorities at integrating immigrants in the labour market. The proportion of time in employment of individuals is used to measure labour-market integration, and we correct for differences in characteristics of immigrants and local labour markets using a two-limit Tobit model. This method is applied to a large administrative micro dataset which contains information on all immigrants in Denmark. We compare the estimated indicators of integration to corresponding uncorrected measures, and conclude that the corrections have a significant effect on the ranking of local authorities.