Academic journal article International Advances in Economic Research

The Effects of Immigration on Regional Unemployment Rates in the Netherlands

Academic journal article International Advances in Economic Research

The Effects of Immigration on Regional Unemployment Rates in the Netherlands

Article excerpt

Abstract The impact of immigration on the change in the unemployment rate in the Netherlands is analyzed using panel data from 26 labor market regions from 1996 through 2003. This study measures immigration through the year-to-year change in the foreign population, paying particular attention to immigrants of non-Western origin. Other variables controlling the composition of the local labor market include: occupation shares, the fractions of workers employed in high- and low-skilled jobs, the fractions of female workers, part-time employees, labor force participants over the age of 55, educational attainment shares, and population density. The ordinary least squares (OLS) results indicate a change in the foreign population in the labor force led to a statistically significant increase in the upward volatility of Dutch unemployment rates while the change in the non-Western share had no significant effect.

Keywords Immigration Unemployment The Netherlands

JEL E24 J21 J61 J82 R10 R23


In the past, immigration has been associated with certain countries such as the United States, Canada, and Australia. For over 200 years, these countries have attracted a melting pot of foreigners hoping to start a better life in a country flourishing with opportunity and high living standards. These traditional immigrant-magnet countries, the United States in particular, have experienced years of debate about both political and economic impacts of large quantities of immigrant inflow (Pugel and Lindert 2000, p. 580). During the past two decades, Europe joined the list of countries and continents struggling with the immigration debate. Migrant inflow to Europe gradually began to rise in the late 1980s due to conditions outside the European Union, resulting in an increase in asylum-seekers from Eastern Europe. This, in turn, created greater demands on countries with more lenient refugee admittance laws (Pugel and Lindert 2000, p. 581). In addition to the influx of refugees to countries like Germany and Switzerland, a growing number of migrants from Turkey and Morocco have moved to various Western European countries to reunite with family members. Among these recipient countries, the Netherlands has acquired a particularly large immigrant population.

At the end of the twentieth century, about 1.5 million people with a foreign birthplace (or 10% of the Dutch population) resided in the Netherlands. The largest immigrant groups in 1996 the Surinamese (280,000), the Turks (270,000), the Moroccans (225,000), and the Antilleans (95,000) (Van Ours and Veenman 1999, p.11). These immigrants of non-Western origin have been a central focus of politicians and economists alike due to their tendency to form small communities in Dutch metropolitan regions such as Amsterdam and Rotterdam. Currently, immigrants represent one-third of the Rotterdam population (O'Sullivan 2005). According to the Central Bureau voor Statistick (CBS), a person qualifies as an immigrant if he or she has at least one parent born in a foreign country.

Not only do these inhabitants have problems adjusting to and integrating into the Dutch society and culture, but they remain in a very poor labor market position. The vast majority of non-Western immigrants residing in the Netherlands are low-skilled workers with a well below average educational attainment. This factor adversely impacts their employment rates, along with inadequate language skills, motivational characteristics, and familiarity with job search channels (Roodenburg et al. 2003, p. 31). Van Ours and Veenman (1999, p. 11) present an interesting interpretation of the minority population unemployment dilemma. They explain that "the supply of minority labor is at the back of an imaginary hiring queue, which implies that when aggregate demand decreases, the minority supply is disproportionately left without a job."

With increasing rates of unemployment among residents of non-Western origin, many Dutch labor market participants wonder if this will somehow negatively affect their position in the labor market. …

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