Comparing Likes with Likes: Immigrants in Denmark and Germany

Amelie Constant, IZA

In this paper I study and compare the earnings of the same immigrant groups in Germany and Denmark using fresh bi-national surveys. Results show that Danish immigrants earn more than comparable immigrants in Germany. Although experience is not as well rewarded in Denmark, an initial earnings advantage upon arrival is sustained. Human capital acquired in the host country generates an earnings premium in both countries. Controlling for individual characteristics the differences across the nationalities disappear among the Danish immigrants. They remain, however, among the German immigrants: Compared to Turks, all groups earn more except the Lebanese, who earn less. Counterfactual analysis shows that if Danish immigrants were to move to Germany, they would suffer a total financial loss but if German immigrants were to move to Denmark they would experience an improvement in their earnings. This suggests that the Danish labor market is more effective in enhancing the immigrants’ capacity to succeed in the labor market.