Integration of Immigrants in Host Countries.

What We Know and

What Works
Tommaso Frattini
In Revue d’économie du développement Volume 25, Issue 1, 2017, pages 105
to 134

ISSN 1245-4060
ISBN 9782807390980

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 Integration of Immigrants
in Host Countries.
What We Know and What Works*
Tommaso Frattini**

Integration of immigrants is at the forefront of policy concerns in many countries. This paper
starts by documenting that in most European countries immigrants face significant labour mar-
ket disadvantages relative to natives. Then it discusses how public policies may affect immi-
grants’ integration. First, we review the evidence on the effectiveness of language and intro-
duction courses. Then, we discuss how different aspects of the migration policy framework may
determine immigrants’ integration patterns. In particular, based on a review of the recent lite-
rature, we highlight the role of visa length and of predictability about migration duration in sha-
ping migrants’ decisions on investments in country-specific human and social capital. Further,
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we discuss implications for refugee migration and also review the role of citizenship acquisition
rules. The paper ends with an outlook of the consequences for sending countries.

Keywords: Migration policy, Citizenship, Refugee migration.

JEL Codes: F22, J15, J61.

*
This paper is based on the keynote lecture delivered at the EUDN Policy Workshop
on Migration and Development in Bonn on December 5, 2016. I wish to thank Axel
Kreienbrink and all the workshop participants for their comments and sugges-
tion. Parts of this paper are also based on the report “Immigrant’s Integration in
Europe”, prepared with Ainhoa Aparicio Fenoll and with the invaluable research
assistance of Karl Siragusa within the Migration Observatory initiative, jointly
carried out by Collegio Carlo Alberto and Centro Studi Luca d’Agliano and funded
by Compagnia di San Paolo.
**
DEMM, Università degli Studi di Milano, via Conservatorio 7, 20122 Milan;
CReAM (London), IZA (Bonn); LdA (Milan).

93
 94 Tommaso Frattini

1 INTRODUCTION AND BACKGROUND

The movement of people across national borders has increased rapidly over
the past two decades: according to United Nations estimates, while in 1995
the world stock of international migrants amounted to about 161 million
people, or 2.8% of the world population, by 2015 the global migrant stock
reached almost 244 million, equivalent to 3.3% of the world population
(United Nations, Department of Economic and Social Affairs, 2015). The re-
cent surge in the stock of migrants has been especially remarkable in the
more developed countries. In Europe, Northern America, Australia/New
Zealand and Japan there were 92 million immigrants in 1995 (7.9% of the
population), a figure that increased to more than 140 million (11.2% of the
population) by 2015.
It is, therefore, perhaps not surprising that immigration is at the fore-
front of the policy debate in many European countries and ranks among
the highest concerns in European public opinions. For instance, in the 2016
Eurobarometer, immigration was ranked as one of the two most important
issues of concern for their own country by 28% of Europeans, following just
unemployment, marked by 33% of respondents. The rapid rise of immigra-
tion in countries which were used to lower migration levels, may in fact pose
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new challenges regarding the economic, social and political integration of im-
migrants and their offspring. In this paper, we provide an overview of some
key issues regarding immigrant’s integration in the host countries’ econo-
mies and societies, and provide a summary of the main findings in the lit-
erature that has studied how host countries’ policies may affect immigrants’
integration.
The remainder of the paper is organized as follows. Section 2 first pre-
sents some background facts about immigrants’ integration across countries,
with a special focus on Europe. Section 3 discusses the ways in which dif-
ferent aspects of policies may affect immigrants’ integration, distinguishing
between policy measures explicitly targeted to immigrants’ integration and
more general characteristics of the migration policy framework. Section 4 ex-
amines the role of citizenship acquisition in integration patterns, after which
section 5 discusses implications for the origin countries. Section 6 summa-
rizes the main findings and concludes the paper.
 Integration of Immigrants in Host Countries 95

2 BACKGROUND: STYLIZED FACT ON IMMIGRANT’S

CHARACTERISTICS AND INTEGRATION

There were 48.7 million individuals in Europe living in a country other than
their country of birth in 2015, which amounts to 9.6% of the European popu-
lation. Most of them, 43.9 million, are concentrated in the EU15 countries,
where the share of immigrants in the population is 11.1%. 1
There is a considerable degree of heterogeneity in the relative size of im-
migrant populations, even within the EU15. The immigrant share ranges from
as low as 0.1% or 0.2% in Romania and Bulgaria, to 4.7% in Finland (the low-
est among EU15 countries) to as high as 19% in Sweden, 30% in Switzerland
and even 49% in Luxembourg, as shown in Figure 1.
Figure 1 : Stock of immigrants in the European Union (% of population)
by country, 2015
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Lower line: EU28 average (9.5%)

Upper line : EU15 average (11.1%)
Note: The figure reports the share of immigrants in the total population of each Europe-
an country in 2015 (vertical bars), as well as the EU28 and the EU15 average (horizontal
scattered lines). Immigrants are defined as foreign-born except for Germany where they
are defined as foreign nationals.
Source: our elaboration on EULFS 2015.

1
EU15 countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom.
 96 Tommaso Frattini

Although most of the recent migration debate in Europe revolves around

refugees, according to UNHCR data in 2015 there were only about 2.6 mil-
lion refugees or asylum seekers in a European country, which amounts to
about 5% of the total immigrant population in the continent (Dustmann et
al., 2017). Therefore, the stock of forced migrants in European countries is
still quite small. Rather, what characterises the most recent years, and creates
the current perception of the predominance of refugee migration relative to
other forms of migration (economic, family reunification, or study visas) is the
sharp increase in the number of asylum applications. Between 2005 and 2015,
the number of asylum applications in the European Union has increased from
235 thousand to more than 1.3 million, with a marked increase between 2012
and 2015, as shown in Figure 2.
Figure 2 : Number of asylum applications (thousands) in EU countries,
2005-2015
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Note. The Figure reports the number of asylum applications (in thousands)
across EU countries in years 2005-2015.
Source: Eurostat (migr_asyctz) and (migr_asyappctza).

Concerns about the economic integration of immigrants in European

countries are often well-founded (Dustmann and Frattini, 2013). Recent evi-
dence from the European Union Labour Force Survey (EULFS) shows that,
across Europe, immigrants face labour market disadvantages relative to na-
tives: as shown in column 1 of Table 1, working age (15-64) immigrants are on
average 5.7 percentage points less likely than natives to be in employment, an
8% gap relative to the cross-country natives’ employment probability of 70%.
 Integration of Immigrants in Host Countries 97

Table 1 : Immigrant-native differences in employment probability in Europe,

2015
Country All immigrants Recent immigrants Earlier immigrants
Austria -0.081 -0.117 -0.071
Belgium -0.103 -0.126 -0.097
Bulgaria -0.107 -0.264 -0.022 °
Croatia 0.004 ° -0.184 0.007 °
Cyprus 0.059 0.123 0.035
Czech Republic 0.010 ° -0.067 0.022
Denmark -0.112 -0.127 -0.107
Estonia -0.019 ° 0.021 ° -0.020 °
Finland -0.100 -0.254 -0.059
France -0.096 -0.278 -0.073
Germany -0.125 -0.182 -0.106
Greece 0.018 -0.127 0.029
Hungary 0.072 0.011 ° 0.081
Iceland -0.037 -0.071 -0.033
Ireland -0.008 -0.055 0.006 °
Italy 0.027 -0.161 0.046
Latvia -0.045 -0.293 -0.035
Lithuania 0.009 ° 0.007 ° 0.009 °
Luxembourg 0.068 0.093 0.057
Malta 0.064 0.010 ° 0.070
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Netherlands -0.151 -0.307 -0.135
Norway -0.069 -0.106 -0.050
Poland -0.044 -0.047 -0.006 °
Portugal 0.045 -0.226 0.067
Romania -0.015 ° -0.164 0.178
Slovak Republic -0.043 0.051 ° -0.061
Slovenia -0.046 -0.152 -0.035
Spain -0.031 -0.106 -0.022
Sweden -0.144 -0.305 -0.100
Switzerland -0.054 -0.080 -0.046
United Kingdom -0.026 -0.076 -0.009
EU15 -0.059 -0.151 -0.040
All -0.057 -0.143 -0.038
Note: The table reports, for each country and for all EU15 or all countries
pooled, the percentage point difference between immigrants and natives in
the probability of employment. The differences are computed as coefficients
on an immigrant dummy in a linear probability model which also includes
quarter dummies. The pooled regressions include also country dummies.
Column 1 reports results for the whole immigrant population. Column 2
“Recent” (3 “Earlier”) reports results for immigrants who have been in the
country for at most five years (for more than years). ° indicates that the
coefficient is not is statistically significant at the 10% significance level.
Source: our elaboration on EULFS 2015.
 98 Tommaso Frattini

Employment probability gaps tend to be larger in Central and Northern

European countries like the Netherlands, Sweden or Germany, while they are
smaller in the UK and in Ireland. Conversely, in several Southern European
countries, like Greece, Italy and Portugal, the employment probability is high-
er among immigrants than among natives (see Frattini and Aparicio Fenoll,
2017). 2 The employment probability gaps relative to natives are larger (14 p.p.)
among recent immigrants (who have been in the country for at most five years)
than among earlier immigrants (4 p.p.), as shown in columns 2 and 3 respec-
tively. Although the difference in employment outcomes between immigrant
cohorts can also, at least partly, be due to changes in their composition, or to
differences in return migration patterns, it is also likely to reflect the acquisi-
tion of country-specific skills, like for instance language, which make immi-
grants more employable with time spent in the host country.
A worrying finding of some research is that for many immigrant groups,
the labour market disadvantage among first generation immigrants persists or
even grows over generations (Algan et al. 2010). Importantly, education may be
playing a role in the persistence of such disadvantages. In fact, a well-known
stylised fact is that in most countries the children of immigrants tend to have
worse educational outcomes than the children of natives (Cobb-Clark et al.,
2012; Dustmann et al., 2012). Furthermore, the available evidence indicates
that their relative performance with respect to the children of natives may
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reflect native-immigrant educational differences in their parents’ generation.
Figure 3, reproduced from Dustmann et al. (2012), shows for instance that
across countries the differences in PISA maths test scores between children
of immigrants and the children of natives are strongly and significantly cor-
related with differences in educational achievements among their parents, as
measured by the share of students with at least one parent having received
tertiary education.
Finally, given the growing importance of refugee migration, especially in
the public perception of European citizens, it is worth looking at what we
know about the labour market integration of refugee migrants. The most
recent available empirical evidence available for Europe has highlighted a
considerable labour market disadvantage of refugees relative to economic mi-
grants (Aiyar et al., 2016 and Dustmann et al., 2017).

2
Note that the countries where immigrants have a higher employment probability
than natives also display relatively low native employment rates. Therefore, these
countries are not characterised by a high probability of employment for immi-
grants in absolute terms, but only relative to natives.
 Integration of Immigrants in Host Countries 99

Figure 3 : Immigrant–native differences in parental education and maths test

scores

Note: The figure plots the average gap in mathematics test scores between
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immigrants and natives versus the difference in the share of immigrant and
native students with at least one parent who has tertiary education.
Source: Figure 2 in Dustmann, Frattini and Lanzara (2012).

Figure 4, from Dustmann et al. (2017), reports differences (conditional on

age, education and gender) in employment probabilities of economic migrants
(black bars) and refugees (light grey bars) from five different areas of origin
relative to natives. Figures are based on analysis of the 2008 EULFS and re-
fer to European countries pooled. Regardless of their origin, refugees have a
lower employment probability than economic migrants with similar charac-
teristics. Importantly, the employment disadvantage is strongest for refugees
from South and East Asia and from North Africa and Middle East, which are
the same areas of origin of most current refugees.
In the remainder of this paper we will discuss, through a necessarily se-
lected review of the literature, how different aspects of migration policy may
influence the process of immigrants’ integration in the host country.
 100 Tommaso Frattini

Figure 4 : Employment gaps relative to natives: refugees and economic

migrants by origin
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Note. The figure reports differences in employment probabilities relative to
natives for non-EU15 economic immigrants (black bars) and refugees (light
grey bars), alongside their 90% confidence intervals, by area of origin across
Europe. Gaps are estimated through separate linear probability models.
Regressions control for gender, age, education (dummy variables for lower
secondary and tertiary education), and host country fixed effects. Estimates
are based EULFS 2008.
Source: Figure 9 in Dustmann, Fasani, Frattini, Minale and Schoenberg
(2017).

3 MIGRATION POLICY AND INTEGRATION

Integration policies
Public policies can play an important role in determining immigrants’ inte-
gration trajectories. An important role can obviously be played by policies of
destination countries that are specifically targeted to the economic and social
integration of immigrants, such as language courses or active labour market
programs. For instance, given the overwhelming evidence linking language
 Integration of Immigrants in Host Countries 101

proficiency of immigrants with their economic outcomes (e.g. Chiswick, 1991;

Dustmann and Fabbri, 2003; Bleakley and Chin, 2004), it is natural expect
that providing language training to immigrants may improve their labour
market performances. Unfortunately, a rigorous empirical assessment of the
effectiveness of such programs is often difficult, and therefore there are only
relatively few studies evaluating this type of policies (see Rinne (2013) for
a review of the challenges faced by this literature). One recent exception is
the analysis of a Finnish program provided by Sarvimäki and Hämäläinen
(2016). They show that a policy reform that introduced “integration plans”
for unemployed immigrants who had been in Finland for less than three years
was very effective in increasing their labour market earnings and decreasing
their reliance on social security benefits. Importantly, the integration plans
were effective mostly because, relative to the standard active labour market
programs centred on job-seeking courses, they provided language courses and
other training specifically designed for immigrants.
Some countries, like Sweden, have offered newly arrived immigrants in-
troduction programs since the late 1960s. Introduction programs typically aim
to provide immigrants with skills helping both their economic and social in-
tegration. To this end, such programs provide a mixture of language training,
job-search courses, subsidized employment and validation of pre-immigration
education and work experience, but often also information about the norms,
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values, history and cultural traditions of the host country. Given the hetero-
geneity of integration programs in terms of organization, length, enrolment
criteria, etc., it is difficult to draw generalizable inference from the evaluation
of specific case studies. However, results from a policy experiment in Sweden
(Andersson Joona and Nekby, 2012) show that the provision of more inten-
sive counselling and coaching and the provision of part-time language training
alongside (not before) labour market training successfully increased employ-
ment probabilities and the probability of being enrolled in other intermediary
labour-market training programs one year after the end of the introduction
programme, an effect that still persisted 22–30 months after registration in
the programme. On the other hand, Clausen et al. (2009) provide a more dis-
mal picture of integration programs offered to immigrants in Denmark: their
results indicate lock-in effects of immigrants into most active labour market
programs, with only subsidised employment being effective in increasing like-
lihood of employment. On the other hand, in line with the literature on the
importance of language skills and despite some caution is need in the causal
interpretation of their results, they also show that for participants in lan-
guage courses, improvement in language proficiency has substantial positive
effects on the probability of finding a job.
 102 Tommaso Frattini

Some integration policies may be effective also outside the labour mar-
ket context. For instance, Carlana et al. (2017) show that providing tutoring
and career counselling to immigrant children displaying high academic po-
tential is an effective way to reduce their educational segregation. Analysing
a program offered to immigrant children in a sample of Italian schools, they
find that treated students have a higher probability of attending an academic
or technical high school track, relative to vocational education, compared to
non-treated students (although the effect is statistically significant for male
students only). Their results indicate that the program’s effects work mostly
through increased non-cognitive skills of treated students who display higher
academic motivation and lower perceived environmental barriers.
Despite the importance of active integration policies, a perhaps more
fundamental role in determining immigrants’ integration trajectories can be
played by the overall migration policy framework. Indeed, immigrants make
their utility-maximizing choices subject to the constraints imposed by migra-
tion policy rules. Any change in the policy will therefore modify the constraint
and, potentially, leads to changes in immigrants’ decisions and thus in their
outcomes. There are at least two ways in which migration policies can affect
integration patterns: entry requirements may affect immigrants’ selection,
and visa duration which influences investments in country-specific skills. In
the remainder of this section, we will examine both aspects in turn.
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Skill-selective migration policies
Migration policies can directly affect immigrants’ (self-) selection. Entry re-
quirements affect the characteristics of the immigrant population in a country.
While some countries have in place mechanisms that are explicitly designed to
select immigrants based on their education, or on the possession of skills that
are deemed necessary for the host country labour market (see, e.g. Australia,
Canada and the UK), even countries that do not explicitly point at inducing
a positive selection of immigrants do operate some type of selection process.
Perhaps unsurprisingly, the evidence shows that more selective migration
policies tend to lead to a more favourably selected pool of migrants, although it
is not clear whether these migrants also have better labour market outcomes
in destination countries. For instance, Cobb-Clark (2003) exploits a change
in the Australian migration policy, which increased selection on migrants’
productive skills in the late 1990s, to study the employment outcomes of im-
migrant cohorts arrived under the old regime as compared to those arrived
under the new rules. After six months in Australia, the latter cohort displays a
higher probability of employment, a higher labour force participation rate, and
 Integration of Immigrants in Host Countries 103

a lower unemployment rate. The labour market advantage of the more recent
cohort is shown to depend on its higher human capital endowment, induced by
the tighter selection criteria. Canadian evidence, on the other hand, indicates
that skill-based immigrants have higher levels of education and report higher
language ability than other classes of immigrants (Aydemir, 2014). However,
the evidence about their labour market integration is less favourable: there
are no differences in labour force participation between different immigration
categories, while there is evidence of lower employment rates for skill-based
immigrants than for kinship-based immigrants. In general, these gaps persist
over the first 18 months in the country. Further, even though skill-based im-
migrants report significantly higher earnings, the data show a convergence
of earnings across immigrant classes over time (Aydemir, 2011). Overall, the
Canadian experience highlights the issue of underutilization of selected highly
skilled immigrants: returns to education are much lower among immigrants
than natives (Aydemir, 2011). Such lower returns imply either that assessed
characteristics do not reflect immigrants’ actual human capital, and thus the
selection mechanism is ill-designed, or that barriers in the labour market, like
difficult credentials recognition, prevent more productive use of the skills that
immigrants bring to the country (Aydemir, 2011).
Adopting a cross-country perspective, Antecol et al. (2003) show that
immigrants to Australia and Canada, who have in place selective migration
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policies, have higher levels of English fluency, education, and income than
immigrants in the United States, where migrants’ skills are not explicitly con-
sidered among the admission criteria. While this result offers support to the
effectiveness of selective policies in facilitating immigrants’ labour market
integration, the authors also show that after excluding Latin American immi-
grants, the observable skills of immigrants are similar in the three countries.
These patterns suggest that the comparatively low overall skill level of U.S.
immigrants may have more to do with geographic and historical ties to Mexico
than with the fact that skill-based admissions are less important in the United
States than in Australia and Canada. Using a similar cross-country approach,
Clarke et al. (2016) find somewhat different results: they show evidence of
a substantial and persistent performance advantage of U.S. immigrants,
relative to immigrants in Australia and Canada, which is evident across the
earnings distribution and among immigrants from a common origin country.
Based on this evidence, they argue that migration policies have a minor role
in determining selection patterns. Rather, the U.S. advantage primarily would
reflect the relative positive selectivity of immigrants in the United States, a
consequence of the higher U.S. returns to skill and of the relative economic
security of Australia’s and Canada’s social welfare systems.
 104 Tommaso Frattini

Temporary vs. permanent visas

A second important way in which migration policies can impact on immi-
grants’ integration is through the temporary or permanent nature of visas,
and through the conditions imposed for visa renewals (see Dustmann and
Gorlach (2016) for a review of the literature on temporary migration).
Why should the behaviour, and thus the integration outcomes, of tempo-
rary migrants be different from those of permanent migrants? The reason
is easy to grasp if we consider that individuals’ behaviour depends not only
on current circumstances, but also on their expectations about the future
economic environment. Consider for instance two individuals who have just
moved to a new country: one is permanently settling there, whereas the sec-
ond is only allowed to stay for at most one year. When making their consump-
tion and savings decisions or deciding on their labour supply, the first person
will take into account the expected evolution of labour markets, GDP and
political environment in the host country, whereas the second will consider
the macro-economic and policy context in both the host and the home country.
Even though the two individuals are otherwise identical, therefore, the dif-
ference in their expected migration duration will lead to different behaviours.
For instance, if the cost of life is lower in the origin than in the host country,
temporary migrants will likely have lower reservation wages than permanent
ones (and than natives), and thus accept lower-paid jobs. Further, temporary
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migrants are also less likely to make costly investments in host-country spe-
cific skills, like for instance, learning the host-country language, which have
an economic (higher wages and employment probability) and social (possibili-
ties of networking with natives) payoff in the host country, but whose returns
may be considerably lower in the home country. The key insight in this case
is that the incentive for any investment in skills depends on the length of the
payoff period for that investment (Ben-Porath, 1967). Thus, immigrants who
are admitted to the country only temporarily have lower incentives to invest
in country-specific human capital, leading to flatter wage profiles. These im-
migrants’ flatter earnings profiles and lower investment in language skills or
networking may reinforce segregation in the host country and result in their
contributing below their economic potential. Additionally, return plans may
also affect immigrants’ investments in their children and impact savings and
consumption choices. Temporary migrants may invest less in social capital,
which has potential consequences for their social assimilation and the segre-
gation of immigrant communities.
These mechanisms have been investigated, among others, by Bellemare
(2007). Using a forward-looking life-cycle model in which accumulated
 Integration of Immigrants in Host Countries 105

working experience affects both wages and locational preferences, he evalu-

ates the impact of enforcing a maximum stay duration for newly admitted
immigrants and demonstrates that restricting migration duration reduces the
labour force participation of low-skilled migrants to Germany but has little
effect on high-skilled immigrants. Using a different strategy, Cortes (2004)
compares the outcomes for economic migrants and refugees in the United
States. Arguing that the latter expect to stay longer and thus have stronger
incentives for investment in destination-specific human capital, she demon-
strates the existence of a positive effect of expected migration duration on
wages (see also Khan, 1997)
Dustmann (2008), using German data, shows that human-capital invest-
ment decisions may also be affected by return plans in an intergenerational
setting in which parental investments in children depend on where parents
believe their children will be living in the future. Therefore the expected tem-
porariness of migration for immigrant parents has intergenerational conse-
quences, affecting their children’s educational attainment. His estimates indi-
cate that among second-generation immigrants, the intention by foreign-born
fathers to stay permanently increases the probability of their sons’ attaining
upper secondary schooling.
Importantly, what matters for economic behaviour, is not the actual mi-
gration duration, but its expectation. Dustmann (1993) shows that, whereas
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the North American and Australian literature has consistently found that im-
migrants tend to close the wage gap with respect to natives with time spent
in the host country, the same catch-up process has not been at work for guest
workers immigrants in West Germany, where the native-immigrant earnings
gap does not close over the whole migration history of the foreign worker. A
key difference between the German case and the case of Australia and North
America is that immigrants to Germany were all recruited only temporarily.
Thus, the incentives to invest in country-specific human capital for the lat-
ter group were considerably smaller than for immigrants who were planning
to permanently settle in other countries. Indeed, the German guestworker
programme was designed to meet the increasing demand for unskilled and
semi-skilled labour in the German labour market in the1950s and 1960s, and
the underlying view was that “migrant workers were temporary labour units,
which could be recruited, utilized and sent away again as employers required”
(Castles, 1986). Residence permits were granted for limited periods, and were
often valid only for specific jobs and areas, while entry of dependents was dis-
couraged. In short, immigrants recruited through guest worker programmes
were made very clear that they were expected to remain only temporarily in
the country, and to work in the specific jobs they had been recruited for, which
 106 Tommaso Frattini

decreased their incentive to invest in additional skills that could have been
valuable in the German labour market. Yet, when the programmes came to
an end in 1973, the majority of foreign workers did not leave the country, and
they ended up staying in Germany for considerably longer periods of time
than initially expected. However, given that they had been initially recruited
under the expectation of remaining in Germany only temporarily, they under-
invested in German-specific human capital.
The integration cost of uncertainty about migration duration is also
highlighted in a recent paper by Adda et al. (2017). The authors develop a
structural model that allows them to investigate the consequences of immi-
grants’ expectations about a possible return for their career profiles. By ma-
nipulating these expectations, they can therefore simulate the impact that
immigration policies have on immigrant behaviour, how they affect selec-
tion, and what their consequences are for welfare. In particular, they dem-
onstrate that important investment decisions are made in the early years
after arrival and that initial beliefs about the migration being temporary
may lead to large earnings losses over the lifecycle if such expectations are
revised only at a later stage. Therefore, migration policies that manipulate
such expectations may lead to welfare losses for both the immigrants and
the population of the receiving country. For instance, when there is uncer-
tainty about when and if a permanent residence permit can be obtained,
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changes in the probability of being granted permanent residence affect new
immigrants’ investments in human and social capital because an increased
risk of having to leave the host country reduces the expected returns to
any location-specific dimensions of human capital. The authors’ simulations
show that if the probability of obtaining permanence is only about 10%, the
implied loss in lifetime utility amounts to around 35%. This loss decreases
when the probability of obtaining permanence after five years increases but
still amounts to about 5% of lifetime utility given a 90% probability of ob-
taining a permanent visa.

Refugee migration
A related point, which is likely to have an increasing importance in the near
future, is what conditions facilitate refugees’ labour market integration. The
discussion in the previous section has highlighted the importance of reducing
uncertainty about migration duration and shown that the most important
decisions about investments in host-country human and social capital are
made by migrants in the first period after arrival in the host country. These
considerations may extend naturally to refugee migration, and suggest that a
 Integration of Immigrants in Host Countries 107

fast examination of asylum claims and a clear host country commitment on

residence duration may favour a swifter refugee integration. 3
The findings of Bakker et al. (2014) provide empirical support for the re-
marks above. Analysing a sample of refugees in the Netherlands, they show
that a long stay in asylum accommodations negatively affects refugees’ men-
tal health and hampers their socio-economic integration. The insecurity about
the future and reduced confidence due to a long stay in asylum accommoda-
tion affects refugees’ chances of labour market success even in the long run.
Further, the analysis demonstrates that residence status has a clear direct
effect on socioeconomic integration: having a temporary refugee status ham-
pers socio-economic integration, compared to refugees who have been granted
the Dutch nationality. Similar conclusions are reached by a recent study on
asylum seekers in Switzerland (Hainmueller et al., 2016), which also adds fur-
ther insights. Indeed, the authors show that speed of application processing
among refugees in Switzerland matters for their integration: one additional
year of waiting reduces the subsequent employment rate by 4 to 5 percentage
points, a 16 to 23% drop compared to the average rate. This result may be
due to a skill atrophy mechanism, whereby asylum seekers who wait longer
before receiving refugee status have less opportunities, and less incentives,
to put their human capital to productive use, and possibly to increase it. On
the other hand, the authors also show that a psychological discouragement
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mechanism may be at work: waiting in limbo for a decision on their future
status can exacerbate the trauma already experienced by many refugees and
lead to psychological stress, depression and disempowerment which decreases
the likelihood of a subsequent successful integration. The fact that the nega-
tive effect of a longer waiting time is stable across different demographic and
education groups suggests that the psychological discouragement mechanism
may be especially relevant in explaining their results. This has strong policy
implications, as it suggests that simply providing asylum seekers access to the
labour market while waiting for a decision may be useful, but not sufficient to
facilitate the economic integration of refugees.

3
See Dustmann et al. (2017) for a discussion of the trade-offs faced by host coun-
tries in determining their asylum policies.
 108 Tommaso Frattini

4 CITIZENSHIP AS AN INTEGRATION TOOL?

Naturalisation, i.e. the acquisition of the citizenship of the host country, is

sometimes perceived as an act that should formally mark the end of inte-
gration in the host country, and reward immigrants for their achievement.
However, naturalisation can also act as a stimulus for integration, or allow
in itself a better and more complete integration in the host country. Indeed,
most research has shown that citizenship acquisition has a beneficial effect on
immigrants’ integration.
Several papers provide evidence that facilitating citizenship acquisition to
immigrants desiring it has positive socioeconomic and cultural implications,
beyond the granting of long-term work certification (Dancygier and Laitin,
2014). For instance, Bratsberg et al. (2002) use US panel data to study the
effect of naturalization on wage growth, tracking the wages of young male
immigrants over the period 1979–1991. They find that naturalization has a
highly significant impact on the earnings of immigrants, even after allowing
for differences in unobserved personal characteristics of immigrants, which
they capture through individual fixed effects in their econometric analysis.
Wage growth accelerates following naturalization, and immigrants move into
better jobs: their probability of white-collar and public-sector employment in-
creases, as does their access to jobs in the union sector. These findings support
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the view that immigrants who have not achieved citizenship face barriers to
certain jobs. However, the authors also acknowledge that, since naturalization
is a choice that immigrants can make or not, and because they cannot exploit
any exogenous change in citizenship status, their results are also consistent
with the view that immigrants invest more heavily in human capital in an-
ticipation of naturalization and receive returns on this investment only after
naturalization.
Some more recent papers have dealt explicitly with the potential endo-
geneity of citizenship, through different strategies. For instance, Mazzolari
(2009) finds that employment and earnings increased for naturalized Latin
American immigrants to the USA when their home countries passed dual citi-
zenship laws, and granted expatriates the right to naturalize in the receiving
country. Bevelander and Pendakur (2012) explore the link between citizenship
and employment probabilities in Sweden, using cross-sectional register data
for 2006. Their estimates explicitly account for the potential endogeneity of
citizenship status using years since first eligible for citizenship as an instru-
mental variable. Citizenship acquisition is shown to have a positive impact
for a number of immigrant groups. This is particularly the case for non-EU/
 Integration of Immigrants in Host Countries 109

non-North American immigrants. In terms of intake class, refugees appear to

experience substantial gains from citizenship acquisition (this is not, however,
the case for immigrants entering as family class).
Two recent papers overcome the problem of non-random selection into
naturalization using a natural experiment in Switzerland, where some mu-
nicipalities used referendums as the mechanism to decide naturalization re-
quests. Comparing otherwise similar immigrants who narrowly won or lost
their naturalisation referendums, the authors are able to test whether citi-
zenship has a causal effect on the social (Hainmueller et al., 2017) or political
(Hainmueller et al., 2015) integration of immigrants. Measuring social inte-
gration through a scale that combines several outcomes (e.g. plans to stay in
Switzerland, membership in social clubs, feelings of discrimination, reading
local press), they find that receiving Swiss citizenship strongly improved long-
term social integration, with effects persisting for more than a decade and a
half after naturalization. The large positive effects of naturalization on in-
tegration are concentrated among the most marginalized immigrant groups,
and immigrants born abroad as opposed to those born in Switzerland. Finally,
integration returns to naturalization are larger, the earlier in their residency
immigrants acquire Swiss citizenship, which suggests that receiving the host
country citizenship just a few years faster can have a lasting impact on en-
hancing the long-term social integration of immigrants. Additionally, natural-
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ization is also shown to have a strong causal and long-lasting effect on improv-
ing the political integration of immigrants. Naturalised immigrants display
a higher political knowledge (measured as knowing the name of the current
Swiss Federal President and knowing the number of signatures required for
a federal initiative), and they are more likely to have voted in the last federal
elections, and more likely to believe that they may have some influence on the
government’s actions.
Germany has recently reformed twice its citizenship law, gradually mov-
ing from a system based on ancestry (jus sanguinis) toward a more liberal
naturalization system, which also includes the possibility of citizenship ac-
quisition by birth (jus soli). First, in 1991, the government introduced for the
first time explicit criteria on how immigrants can obtain German citizenship,
setting an age-dependent minimum residency requirement. Then, since 2000,
the criteria were made less restrictive and immigrants are allowed to natural-
ize after eight years of residency in Germany, whereas the children of foreign
parents in Germany obtain automatically citizenship at birth.
These policy changes have allowed scholars to analyse the consequenc-
es of naturalization on a variety of outcomes. Steinhardt (2012) estimates
 110 Tommaso Frattini

the impact of naturalization on wages of immigrants in Germany using ad-

ministrative panel data. His results show that the acquisition of citizenship
has a positive impact on wage growth of male immigrants in the years after
the naturalization event. Naturalized female employees also display higher
wages, but their wage premium is largely due to positive self-selection into
citizenship. His analysis also indicates that the impact of becoming German
varies across different countries of origin: while naturalization has no im-
pact on wages of EU immigrants, all extra-EU immigrants profit from ac-
quiring German citizenship. Gathmann and Keller (2014) go one step further,
and rather than relying purely on fixed effects panel estimates to account for
self-selection into citizenship, they use the arguably exogenous variation in
eligibility rules induced by the citizenship reforms to identify the effect of
citizenship for labour market performance. Additionally, unlike most previous
studies, they estimate not the effect of citizenship acquisition, but the effect
of eligibility for citizenship in itself on immigrants’ labour market outcomes.
Their results show that the possibility to naturalise has no significant effects
on labour market outcomes of immigrant men, while it has substantial re-
turns for immigrant women. Differently from the findings of Bratsberg et al.
(2002) for the US, they find no evidence that immigrants work more in the
public sector or in a white-collar job after citizenship. Furthermore, wage re-
turns do not appear to be driven by improvements in German language skills.
Rather, about 30% of the wage returns for women are driven by their moves
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to jobs with a permanent contract, to larger firms and to better paying occupa-
tions in the private sector. In line with previous papers, they also confirm that
wage returns are typically larger for immigrants from outside the European
Union and, more generally, for immigrants from poorer countries. Further,
they show that recent immigrants, both men and women, enjoy large returns
to citizenship, which matters less for earlier immigrants. Importantly, all
these effects results from the mere possibility to naturalize, rather than from
actual citizenship acquisition, which means that liberalization of eligibility
for citizenship may be an effective policy even in the absence of a considerable
take-up rate (as was the case in Germany).
Overall, the cumulative (though not universal) evidence weighs in the di-
rection of accommodative citizenship regimes having beneficial economic and
social effects (Dancygier and Laitin, 2014). However, the mechanisms driving
these results are still not completely clear. From an economic point of view, in
most countries permanently resident immigrants, or even just legally resident
aliens, obtain nearly all the rights of the country’s citizens (except for voting
in national elections and sometimes public sector employment). Therefore,
it is unlikely that the gains from citizenship are a direct consequence of the
 Integration of Immigrants in Host Countries 111

additional acquired rights. Bloemraad (2017) highlights five other mechanisms

that may be at work. First, citizenship may carry social value that provides le-
gitimacy, beyond access to material benefits or legal rights: others in society
(employers, public officials, landlords, etc.) might feel stronger obligations to
fellow citizens than to non-citizens, even though they are formally entitled
to the same rights. Secondly, through the combination of access to rights and
legitimacy, citizenship might also facilitate mobilization for collective action.
Additionally, the conditionality of citizenship acquisition in many countries,
which may for instance require immigrants to satisfy minimum residency re-
quirements, pass a language and/or civics test, pay a fee, might produce in-
vestment or socialization that changes people’s skills, motivations, actions or
viewpoints. Further, from a more typically economic point of view, citizenship
can also work as a signalling device vis-à-vis others. Naturalised immigrants
signal their commitment to the host country and may be perceived as possess-
ing better language ability or motivation, irrespective of their actual skills.
Finally, citizenship may also have social psychological effects, providing natu-
ralised immigrants with a sense of self-empowerment and identification which
may increase their sense of well-being, even in the absence of actual changes
in their factual conditions (see Bloemraad (2017) for a thorough discussion of
each of these points). Although all of these mechanisms are theoretically plau-
sible, more research is needed to understand their relative empirical relevance.
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Birthright citizenship and the integration of first and second
generations
The latest reform of the German citizenship law has also provided the op-
portunity of studying the effects of automatic citizenship acquisition for chil-
dren of immigrants born in Germany on their parents’ behaviour. The reform,
which was voted in May 1999 and came into effect on January 1 2000, in-
cluded elements of the birthright citizenship system, granting automatically
German citizenship to any child born to foreign parents as long as at least
one parent had been ordinarily resident in Germany for at least 8 years and
had been granted permanent right of residence. The law also included some
retrospective transitional provisions, whereby the German-born children of
immigrants aged 10 or younger on January 1, 2000 could be naturalized if
their parents satisfied the new requisites for automatic citizenship acquisi-
tion at the time of the child’ birth, as long as they applied for the German
citizenship before December 31, 2000. This retrospective provision provides
a useful source of exogenous variation in the eligibility for citizenship among
immigrants’ children, which has been exploited in a series of paper.
 112 Tommaso Frattini

Avitabile et al. (2013) analyse the introduction of birthright citizenship

on parental integration outcomes. They show that the reform produced a sig-
nificant and sizable increase in the probability of interacting with Germans
for affected immigrants with lower education backgrounds. On the other
hand, more educated affected immigrants displayed significantly higher prob-
ability of reading German newspapers. Consistently with the idea of higher
socio-economic integration induced by the reform, Sajons (2016) shows that
introducing birthright citizenship for children has influenced the return mi-
gration behaviour of immigrant families, inducing more families affected by
the reform to stay in Germany. There are several mechanisms that may ex-
plain why families whose children are eligible for German citizenship may
invest more in their social integration in the host country. First, if we think
of parents’ own assimilation as an investment in children’s future outcomes,
and since citizenship allows higher returns of human capital (see the evi-
dence reviewed above), then birthright citizenship increases incentives to in-
vest in children’s outcomes, thus in parental integration. Additionally, the
increased effort to learn the language and networking with natives, and the
ensuing drop in return migration, might be due to a perception of favourable
changes in attitudes of natives towards immigrants, which induces more ef-
fort to assimilate to the local culture. A last explanation links parental invest-
ment in host country-skills to the desire to maintain strong ties with their
children: if children, through their host country citizenship, become part of
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the host society, their parents have higher incentives to become part of it
too, as they do not want to become culturally distant from their offspring.
Unfortunately, there is not enough evidence to empirically disentangle the
three mechanisms.

5 OUTLOOK: THE EFFECTS FOR SENDING COUNTRIES

Although we have so far considered only the host country perspective, it is well
known – and almost obvious – that emigration may have consequences for origin
countries, too (see e.g. Clemens et al. (2014), Docquier and Rapoport (2012) and
Yang (2011) for an overview of the literature on brain drain-brain gain, remit-
tances, and other types of diaspora externalities). In turn, such origin countries
effects may depend on how well integrated immigrants are in the destination
countries, though the effect of integration may be non-monotonic. Two of the
most “classical” ways in which migration is expected to affect origin countries
are brain drain/return migration and remittances. Below we will shortly discuss
how the mechanisms discussed in the previous sections affect each of them.
 Integration of Immigrants in Host Countries 113

Until some years ago, brain drain was at the centre of the policy con-
cerns regarding the effects of emigration on origin countries. Recently, an in-
creasingly large literature has highlighted the possibility that migration may
instead lead to a brain gain. According to this – now predominant – view,
the mere possibility of migration to a country where returns to education are
higher can actually lead to an increase in the stock of human capital in send-
ing countries, as it drives up expected returns to skills and thus increases the
incentives to invest in education. Moreover, brain circulation may facilitate
the diffusion of knowledge, a process that is accelerated by return migration.
The temporariness of visa obviously interplays with this process in two op-
posing ways: on the one hand, the perspective of a shorter stay in the host
country, where returns to human capital are higher, reduces migrants’ incen-
tives to invest in education; on the other hand, if the host country requires
all immigrants to leave after a certain amount of time, the larger number of
returning migrants and the related diffusion of knowledge increases the send-
ing country’s overall human capital (see Domingues et al., 2003). Additionally,
if temporary migrants invest less in host-country human capital, and if this
human capital is not entirely country-specific, then the amount of knowledge
each returning migrant brings with them will be lower than the amount of
knowledge that returning migrants would individually bring if temporary
visa did not constrain them to shorter-than-desired permanence in the host
country.
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Remitting behaviour may also be influenced by host country policies in
several direct ways (see De Arcangelis et al. (2015) for an example), but also in
more indirect ways. For example, visa temporariness plays a role in this case,
too. There is evidence from several countries of a positive association between
immigrant return plans and savings and remittances decisions (e.g. Merkle
and Zimmermann, 1992, Pinger, 2010, Dustmann and Mestres, 2010a). This
empirical regularity can be easily reconciled with the existing literature,
which has identified three primary motives for remitting: support for remain-
ing family members, savings for future consumption or for investments in
the home country, and insurance against a future return. Each of these mo-
tives may be affected by the temporariness of migration. Family support is
likely to be more common in temporary migrations, because in these cases
immigrants are more likely to leave their families behind (see Funkhouser,
1995). This is even more likely to be the case for migrations that are con-
strained to be temporary, as temporary visa holders are often subject to more
restrictions pertaining to family reunification. As regards savings in the origin
country, temporary migrants have been shown to be more likely to hold assets
in their home countries (Dustmann and Mestres, 2010b). Lastly, in terms of
 114 Tommaso Frattini

remittance as insurance, a mechanism supported by the analysis of Batista

and Umblijs (2016) showing that risk-averse individuals are more likely to
send remittances and to remit higher amounts, migrants planning to return
at some future time may contribute to the home community in order to “pay
their way” back.

6 CONCLUDING REMARKS

Integration of immigrants is a key challenge confronting European countries

as well as most other advanced economies. We have documented that in most
European countries immigrants face significant labour market disadvantages
relative to natives. Although such disadvantages are stronger among recently
arrived immigrants than among those who have been longer in the host coun-
try, which suggests that a process of labour market integration may be at
work, they still persist after many years since migration and may be transmit-
ted to the next generation. This calls for policy actions to favour or accelerate
the integration process.
Some countries have, in fact, implemented policies like language or intro-
duction courses aimed at facilitating immigrants’ integration. In this paper,
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we have reviewed some of them, and presented studies that evaluate their
effectiveness. However, we have also argued that the whole migration policy
framework can play a decisive, and perhaps more important, role in determin-
ing immigrants’ integration patterns. In particular, we have shown that the
temporariness of visas may affect migrants’ incentives to invest in country-
specific human and social capital and thus affect their integration trajectories.
Based on the existing literature, we have concluded that uncertainty about
the migration duration may lead to sub-optimal investments and thus to a
slower and less successful integration. Thus, a longer duration of working vi-
sas and a well-defined and ex-ante clear pattern toward permanent residence
status may be effective and inexpensive policy measures to help integration.
For the same reason, fast decisions on asylum applications may be very effec-
tive in facilitating the integration of refugees, a group of migrants for whom
integration appears historically to be more problematic than for economically-
motivated movers.
Another important policy aspect, which operates not at the beginning of
the migration experience, but at a later stage of the process, is the regula-
tion of citizenship acquisition. A growing body of literature has shown that
naturalised immigrants tend to over-perform those who do not naturalise,
 Integration of Immigrants in Host Countries 115

and that this is not only due to positive self-selection into citizenship acquisi-
tion. Therefore, facilitating the acquisition of the host country citizenship for
immigrants and for their offspring may be a very cost effective measure to
promote integration. Importantly, citizenship acquisition may be particularly
effective in promoting also the social and political integration of immigrants,
two aspects of integration that go beyond economic integration, and are not
necessarily linked to it.

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