The socioeconomic integration of the immigrant population in Europe is a theme that dominates much of the political discourse and attracts the interest of economists and social scientists. Understanding the patterns of immigrant integration in European labour markets (Algan et al. 2010, Solmone and Frattini 2022) and educational systems (Carlana et al. 2022, Dustmann et al. 2012) and the role played by different policy interventions in this process (Brücker et al. 2021, Gathmann and Garbers 2023) is particularly relevant given the current levels of the population in Europe with immigrant backgrounds.
Despite the challenges posed by the sizeable inflows of relatively low-skilled asylum seekers (Hasager et al. 2022, Rapoport 2023) – which are sometimes instrumentally voiced in the political debate – the presence of immigration flows can also constitute an opportunity for host country economies and labour markets (Borjas 2001, Amior 2024). Particularly in the policy arena, immigration is indeed often viewed as a potential solution, at least in the short to medium term, to address skill shortages. For instance, the European Commission’s Skills Agenda for Europe aims to better identify skill shortages in the European labour market and harness the potential offered by migration. Similarly, the Talent Partnerships outlined in the new European Pact on Migration and Asylum seek to promote international mobility between the EU and partner countries, focusing on a better alignment between labour market needs and skills. It has also been argued convincingly that countries like the US have bolstered their technological leadership thanks in part to contributions from foreign scientists and inventors.
The share of tertiary-educated immigrants in Europe is similar to natives’, but their employment probability is not
In a recent report (Frattini and Dalmonte 2024), we analysed the integration of highly educated immigrants into European labour markets. Contrary to common perceptions, the percentage of immigrants in Europe with a university education (32%) is comparable to that of natives (34%). However, there is significant variation among countries. Interestingly, the percentage of immigrants and natives with university education correlates strongly within each country: where the native population is more educated, so too are the immigrants, and vice versa (Figure 1).
Figure 1 Percentage of immigrants and natives with tertiary education
However, tertiary-educated immigrants in Europe lag behind similarly educated natives in terms of employment probability (Figure 2). The gap is largest for immigrants who have acquired their university education abroad: their employment probability is 15.6 percentage points lower than that of tertiary-educated natives (88.5%). This differential cannot be explained by differences in age and gender between the two groups. Indeed, even accounting for such differences, the employment probability differential increases up to 16.5 percentage points (orange bar in Figure 2).
For the 38% of first-generation tertiary-educated immigrants who have received their university degree in the country they currently live in, the employment probability gap is smaller but still present (about 4 percentage points, which increases to 5 percentage points when taking into account differences in age and gender). Remarkably, even university-educated second-generation immigrants, i.e. the native-born children of immigrant parents, have a lower employment probability than the similarly educated offspring of native parents.
Figure 2 Differences in the probability of employment between migrants and natives with tertiary education, by country of education
The over-education of non-native workers
Employment probability gaps are not the only source of penalty for tertiary-educated immigrants in European labour markets. In fact, even among those who do have a job, the probability of working in a highly skilled occupation (i.e. an occupation in the International Standard Classification of Occupations major groups 1, 2, or 3) for an immigrant with a foreign university degree is 20 percentage points lower than for a similar native (who have an 81% probability of working in a high-skilled occupation). Even among immigrants who have acquired their tertiary education in the host country, the likelihood of having a highly skilled job is 1.4 percentage points lower than comparable natives.
We can also quantify the mismatch between workers’ skills and their occupations by measuring their ‘over-education’. We define a person as over-educated if their educational qualification is higher than the modal (i.e. the most frequent) educational qualification of native workers in the same occupation, age group, and country of residence. According to this definition, 38.5% of natives with tertiary education in Europe are over-educated. However, this share is significantly higher among non-natives with equivalent education levels, especially if they are foreign-educated. In fact, migrants with foreign degrees have a 22 percentage point higher probability of over-education than natives. This differential is considerably lower, though not zero (2.5 percentage points) for those who have a domestic tertiary qualification.
One reason why foreign-educated migrants display such a high level of over-education relative to similarly educated natives could be that they lack some human capital dimensions that are destination-country specific, such as language skills. If this is the case, then over-education should decrease with time spent in the receiving country.
In Figure 3, we show how immigrant-native differentials in the probability of over-education change for immigrants over the number of years since migration. Even though such an analysis should be interpreted with caution – we are not comparing the same immigrants at various points in time but immigrants who have been in the host country for different periods and that we observe at the same moment – the figure does not show any indication that the over-education differential is closing over time. Instead, if anything, the differential tends to widen for immigrants who have been in the host country longer (a fact that is likely driven by the contemporary increase in employment probability). Thus, this graph suggests that the lack of language skills (or other country-specific skills) is unlikely to be the primary reason why immigrants are more over-educated than natives.
Figure 3 Differential in the probability of over-education between foreign-educated immigrants and natives with tertiary education, by years since migration
Another potential reason for the persistently high levels of over-education is that what we formally measure as over-education may not accurately reflect an actual gap in workers’ effective skills. Such a mismeasurement might be driven by differences in educational quality between immigrants’ countries of origin and their host countries.
To assess the plausibility of this alternative explanation, we use data on school quality across the world from the Harmonized Learning Outcomes dataset (Angrist et al. 2021). In Figure 4, we show that, indeed, in most European countries tertiary-educated migrants come from countries with a lower educational quality than in their destination. The differential is strongest in Denmark, Germany, Italy, and the Netherlands, whereas the differential is smaller, or even positive, in countries like Latvia and Norway.
Figure 4 Average difference in education quality (Harmonized Learning Outcomes) of residence and origin country of highly educated migrants
In Figure 5, we use a Gelbach decomposition to break down the immigrant-native over-education differential into a component explained by individual characteristics (such as age and gender), a part that can be traced back to differences in education quality in the countries of origin, and a residual component. Although differences in educational quality matter, Figure 5 shows that they cannot explain more than about 13% of the overall differential.
Figure 5 Decomposition of the migrants-natives over-education differential: The role of individual characteristics and education quality
This evidence indicates a significant waste of skills that could potentially benefit the European labour market but are not effectively used. The mismatch has substantial implications not only for immigrants but also for host countries, given the importance of human capital for economic growth. Most of the policy debate on migration in Europe tends to revolve around humanitarian issues and the management of predominantly low-skilled migration. Yet, immigrants who are currently in Europe already have, on average, tertiary educational credentials that are comparable to those of EU natives but are often not adequately put to productive use.
Against this backdrop, it is surprising that the EU immigration policy agenda does not feature more highly the identification of the causes of such skill waste – such as discrimination in hiring, lack of recognition of foreign qualifications and of effective integration policies, and the influence of social networks – and the design of targeted policies that effectively allow Europe to unlock the full potential of its diverse workforce and avoid the waste of valuable human capital.
References
Algan, Y, C Dustmann, A Glitz, and A Manning (2010), “The economic situation of first and second-generation immigrants in France, Germany and the UK”, The Economic Journal 120(542): F4–F30.
Amior, M (2024), “The contribution of immigration to local labor market adjustment”, Journal of Labor Economics, forthcoming.
Angrist, N, S Djankov, P K Goldberg, and H A Patrinos (2021), “Measuring human capital using global learning data”, Nature.
Borjas, G J (2001), “Does immigration grease the wheels of the labor market?”, Brookings Papers on Economic Activity 2001(1): 69–133.
Brücker, H, A Glitz, A Lerche, and A Romiti (2021), “Occupational recognition and immigrant labor market outcomes”, Journal of Labor Economics 39(2): 497–525.
Carlana, M, E La Ferrara, and P Pinotti (2022), “Goals and gaps: Educational careers of immigrant children”, Econometrica 90(1): 1–29.
Dustmann, C, T Frattini, and G Lanzara (2012), “Educational achievement of second-generation immigrants: an international comparison”, Economic Policy 27(69): 143–85.
Frattini, T, and A Dalmonte (2024), Immigrant integration in Europe, 8th Migration Observatory Report, Centro Studi Luca d’Agliano and Collegio Carlo Alberto.
Gathmann, C, and J Garbers (2023), “Citizenship and integration”, Labour Economics 82: 102343.
Hasager, L, G Peri, and M Foged (2022), “Language training and placement in strong labour markets promote refugees’ long-run economic integration”, VoxEU.org, 11 December.
Rapoport, H (2023), “Labour market access for Ukrainian refugees”, VoxEU.org, 9 January.
Solmone, I, and T Frattini (2022), “The labour market disadvantages for immigrant women”, VoxEU.org, 30 March.
