Integration of Immigrants in Denmark: A Benchmarking Analysis of Municipality Level Outcomes during the Period 1999-2006

by Leif Husted, Chantal Pohl Nielsen and Eskil Heinesen, May 2007, AKF

Report available in Danish

Summary

Introduction

From 1999 onwards Danish municipalities have had the full responsibility for active policies aimed at integrating new immigrants into the labour market. The group of immigrants for which the municipalities have these obligations are persons who 1) have received their residence permit after January 1st 1999, 2) were 16-64 years of age when they received their residence permit, 3) are from non-EU and non-Nordic countries, and 4) are refugees or family reunified. The overall framework for Danish integration policy is determined by national law, but the 98 municipalities have great discretion regarding administration of the law and specific implementation of the policies.

The purpose of this report is to specify and estimate an indicator which may be used to compare or benchmark the success of Danish municipalities regarding economic integration of immigrants. We use administrative micro data for the analysis. The data set is based partly on the DREAM database established by the Danish Ministry of Employment and partly on administrative registers at Statistics Denmark. It covers the period from January 1, 1999 until September 17, 2006. It is a full sample of all immigrants that fulfil the four criteria listed above and who also received social security benefits (more precisely, introduction benefits) at the time they received their residence permit (or shortly thereafter). The benchmarking indicator that we estimate is based on the duration from the date an immigrant receives his or her residence permit to the date he or she becomes self-supporting. Being self-supporting in this context is defined as not being registered as a recipient of social security benefits (exceptions are receivers of benefits from the State Education Fund, who are defined as self-supporting). If this average duration is short in a given municipality, this may indicate that the municipality is relatively successful at integrating its immigrants. By contrast, a long average duration may indicate that the municipality is relatively less successful.

It would, of course, be misleading to regard an immigrant who is self-supporting for just a few weeks, as successfully integrated. The focus of this report is therefore on the duration from the date the immigrant receives his or her residence permit until he or she becomes self-supporting for a longer period of time. In this report we define this to be for a period of 26 weeks or more. This specification is chosen because the municipalities receive a bonus from the state for each immigrant who gets a job for a consecutive period of at least 26 weeks.

Correction for variation in the municipalities‘ characteristics

A long average duration from the date of residence permit to the date of becoming self-supporting may not, however, necessarily be due to inefficient implementation of the national integration policy in a given municipality. Such an outcome may well be caused by unfavourable general conditions in that particular municipality, e.g. a high local unemployment rate, or unfavourable characteristics, in terms of labour-market integration, of the immigrants living in that municipality. Therefore, we correct the average duration until becoming self-supporting for municipality level differences in general conditions and (observed) immigrant characteristics.The corrections are based on estimating a statistical duration model (a proportional hazard specification) for all immigrants in Denmark fulfilling the criteria listed above. The individual characteristics that enter the model as explanatory variables (and which are used for calculating corrections) are the following:

gender
basis for residence permit (refugee status, family reunification to a refugee, or family reunification to a non-refugee)
whether a person has had a Danish residence permit at an earlier point of time
country of origin
age
single/married (to a Danish citizen or not)
number of children (of different ages) and whether or not the person is a single parent
year of residence permit
health (proxied by the number of contacts with general practitioners, whether the person has gained his or her residence permit for humanitarian reasons, and whether the person is a convention refugee)
the person’s prerequisites for learning the Danish language
whether the person has lived in other municipalities prior to his or her current municipality of residence, and if so, for how long.

We take account of variation in these individual characteristics at a very detailed level. Thus, we estimate the duration model separately for males and females, and we include 27 dummy variables for country of origin.

The estimated effects of these individual characteristics on the hazard rate for the person becoming self-supporting (or undertaking education) are in general highly significant. We find, for example, that the hazard rate is significantly smaller for older than for younger immigrants, it is smaller for persons (especially females) with young children, it is smaller for refugees than for persons who are family reunified to non-refugees, and it is very low for immigrants from countries such as Somalia, Afghanistan and Iraq compared to immigrants from European countries. Of course, the large estimated effects of the dummy variables indicating country of origin may in large part be due to the fact that we have no data on »cultural distance« or labour-market experience from the home country, and we only have very incomplete data on the level of education acquired in the home country (namely the indicator used for determining an individual’s prerequisites for learning the Danish language).

The two general municipality characteristics included in the duration model as explanatory variables are measured at commuting area level. They are:

the local unemployment rate
the number of jobs as a share of the working-age population.

A high local unemployment rate has, as expected, a negative effect on the likelihood of becoming self-supporting. If the number of jobs as a share of the working-age population is high this has a positive effect on the likelihood of becoming self-supporting.

Correcting for the estimated effects of the variables mentioned above, the variation between municipalities in the average duration from obtaining a residence permit until the person becomes self-supporting is reduced by almost 80%. This means that about 80% of the differences between municipalities is explained by the fact that the municipalities and the immigrants living in them have different characteristics.

Calculating the benchmarking indicator

The benchmarking indicator for a given municipality is calculated as the mean »observed« duration until immigrants become self-supporting (based on the non-parametric Kaplan-Meier estimate of the survival function for the municipality) minus the mean expected duration, given the estimated parametric duration model and the observed characteristics of the municipality and its immigrants. Due to the relatively short observation period both mean durations are calculated as restricted means at four years.

The expected duration is long if the local unemployment rate is high or if large shares of the immigrants in a given municipality are refugees, elderly, females with small children, or from countries such as Somalia, Afghanistan and Iraq. The expected duration is short if the local unemployment rate is low or if large shares of the immigrants are young, family reunified to non-refugees or from European countries.

A negative value of the benchmarking indicator for a given municipality implies that the »observed« mean duration until immigrants in that municipality become self-supporting is shorter than expected – given the model. I.e. that particular municipality seems to be relatively successful in terms of integrating immigrants. By contrast, a positive value of the indicator implies a longer observed duration than expected and indicates less successful implementation of the integration policy in this particular municipality.

Discussion

Compared to other indicators which have been used to evaluate Danish municipalities, the advantage of the benchmarking indicator calculated in this report is that it corrects the observed duration for important differences in terms of characteristics of both the individual immigrants and local labour markets. This correction is important since it implies that the ranking of many municipalities changes quite substantially compared to a ranking given by the observed mean durations without this correction. The correction also results in less variation in mean duration between municipalities, although substantial differences remain.

It is important, however, to stress that the benchmarking indicator is not a very precise measure of the degree of success of the municipalities’ implementation of the national integration policy. There are important variables, which we are not able to take account of when estimating the indicator. For instance, we have only very limited information on health status based on the number of contacts with general practitioners, and we have no information on education or labour-market experience obtained in the country of origin. Nor do we have information on individuals’ abilities or motivation. There may also be important municipality level characteristics, which we have not been able to take sufficient account of – e.g. regarding local labour‑market conditions.

Another reason why the benchmarking indicator is not a very precise measure of the success of municipal integration policies is that it is calculated for a relatively short period of time, namely from 1999 to 2006. Especially immigrants who have received their residence permit in 2004 and 2005 have only had a very short time in which to find a job or otherwise become self-supporting within the sample period. Important aspects of the municipal integration effort – especially measures targeted towards immigrants with weak qualifications – will have positive effects only after several years.

For these reasons, we have chosen to present the benchmarking results by grouping municipalities into quintiles, rather than presenting them by their »exact« benchmarking ranking. Tables 5.3 and B2.3 in this report show the placement of the individual municipalities in these quintiles (in alphabetical order within each quintile) based on their value of the benchmarking indicator.

The ranking of municipalities according to the benchmarking indicator may be used as a starting point for other research. For instance, it would be relevant to conduct thorough qualitative investigations of a few municipalities, some with a high benchmarking score and others with a low score. Such analyses may be used to reveal important differences in the way the different municipalities implement the national integration policies. Such differences may in turn explain some of the variation in the benchmarking score, thereby creating a basis for an overall improvement of Danish integration policy.

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