When Minority Labor Migrants Meet the Welfare State

Life cycle employment of minority labor migrants who entered Norway in the early 1970s diverges from that of natives. Immigrant employment was nearly complete during early years but declined to 50% by the year 2000 (compared to 87% for a native comparison group). We find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit. We trace part of the decline to migrants being overrepresented in shrinking industries. But we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members.