Immigrant skills and employment

This paper studies the distributions of literacy skills, education, and employment of immigrants and natives in three host countries: Canada, the United States, and Norway. For natives, we uncover remarkably stable relations between literacy skills, schooling, and employment across countries. For immigrants, the relations differ strongly: whereas literacy skills form only a weak determinant of immigrant employment in the North American labor markets, in Norway literacy is much more important for immigrant than native employment. We investigate various sources of this discrepancy and fail to uncover evidence that the finding reflects differential immigrant sorting across host countries. Instead, results show that literacy skills are particularly important for groups characterized by low employment in the Norwegian labor market, consistent with the hypothesis that a compressed wage structure, employment protection, and social insurance with high replacement ratios create adverse employment effects for immigrants.