OIT - A study of the employment and earnings outcomes of second-generation migrants

X A study of the employment and earnings outcomes of secondgeneration migrants Authors / Utsoree Das, Giulia Dellaferrera, Sevane Ananian

May / 2025 ILO Working Paper 141© International Labour Organization 2025 Attribution 4.0 International (CC BY 4.0) This work is licensed under the Creative Commons Attribution 4.0 International. See: https:// creativecommons.org/licenses/by/4.0/. The user is allowed to reuse, share (copy and redistribute), adapt (remix, transform and build upon the original work) as detailed in the licence. The user must clearly credit the ILO as the source of the material and indicate if changes were made to the original content. Use of the emblem, name and logo of the ILO is not permitted in connection with translations, adaptations or other derivative works. Attribution – The user must indicate if changes were made and must cite the work as follows: Das, U., Dellaferrera, G., Ananian, S. A study of the employment and earnings outcomes of second-generation migrants. ILO Working Paper 141. Geneva: International Labour Office, 2025.© ILO. Translations – In case of a translation of this work, the following disclaimer must be added along with the attribution: This is a translation of a copyrighted work of the International Labour Organization (ILO). This translation has not been prepared, reviewed or endorsed by the ILO and should not be considered an official ILO translation. The ILO disclaims all responsibility for its content and accuracy. Responsibility rests solely with the author(s) of the translation. Adaptations – In case of an adaptation of this work, the following disclaimer must be added along with the attribution: This is an adaptation of a copyrighted work of the International Labour Organization (ILO). This adaptation has not been prepared, reviewed or endorsed by the ILO and should

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MTEQ004101 ILO Working Paper 141 Abstract This study examines the labour market outcomes of second-generation migrants in 32 countries (30 European countries, Australia and the United States of America). Drawing on data from labour force surveys and other household surveys contained in the ILO Microdata Repository, it focuses on labour force participation, unemployment, status in employment, wages and self-employment income. The results of the analysis reveal differences between second-generation migrants and other people born in the same country once the specific composition of that population group in terms of age and educational attainment is taken into account. Second-generation migrants generally exhibit lower labour market participation and higher unemployment rates, and they appear more likely to be employees than self-employed in several of the countries studied. With regard to earnings, on average across the countries studied, a small wage gap is observed between second-generation migrant workers and the rest of native-born workers, with wage premiums existing only in a few countries. The final chapter discusses relevant legal frameworks dealing with non-discrimination and employment that affect second-generation migrants. About the authors

tween second-generation migrant workers and the rest of native-born workers, with wage premiums existing only in a few countries. The final chapter discusses relevant legal frameworks dealing with non-discrimination and employment that affect second-generation migrants. About the authors Utsoree Das is a PhD candidate at the Institute of Economics and Econometrics, University of Geneva. She is a researcher in applied microeconomics. Her work focuses on environmental and resource economics, climate shocks, migration, development, political economy, and sustainability and transformative change. Giulia Dellaferrera works for the promotion of domestic workers’ rights in Tanzania with CVM, after having analysed work-related inequalities at ILO Research Department. Previously, she worked at UNHCR, ICRC and Genocide Watch. She is specialised in human rights and international humanitarian law. Sevane Ananian is an economist in the Research Department of the International Labour Organization (ILO), where he has worked since September 2021. His work focuses on wages and working conditions, inequality, and the transition to a green economy.02 ILO Working Paper 141 Abstract 01 About the authors 01 X Introduction 07 X 1 Literature review 09 X 2 Data and methodology 13 2.1. Defining second-generation migrants 13 2.2. A sample of household surveys from 32 countries 14 X 3 Descriptive statistics 16 X 4 Employment of second-generation migrants 19 4.1. A methodology for analysing the differences in employment outcomes between second-generation migrants and other native born people 19 4.2. Employment outcomes of second-generation migrants 21 On average across countries, second-generation migrants are less likely to participate in the labour force and more likely to be unemployed 21 Second-generation migrants tend to work as employees 25 X 5 Earnings of second-generation migrants 27 5.1. A methodology for analysing the differences in earnings outcomes between second-generation migrants and other native-born people 27 5.2. Wages of second-generation migrants 29

Second-generation migrants tend to work as employees 25 X 5 Earnings of second-generation migrants 27 5.1. A methodology for analysing the differences in earnings outcomes between second-generation migrants and other native-born people 27 5.2. Wages of second-generation migrants 29 5.3. Self-employment income of second-generation migrants 31 X 6 Legal frameworks shaping the labour market experience of second-generation migrants 33 6.1. International legal standards ensuring equal employment opportunities and treatment 33 International labour standards dealing with non-discrimination and equal treatment 35 The supervisory practice of the Committee of Experts on the Application of Conventions and Recommendations 36 6.2. National practices regarding non-discrimination and equal treatment of second-generation migrants 38 Table of contents03 ILO Working Paper 141 X Conclusion 43 Annex 44 Figures 44 Tables 49 References 57 Acknowledgements 6504 ILO Working Paper 141 List of Figures Figure 3.1. Share of second-generation migrants in the working-age population in each of the sampled countries 16 Figure 3.2. Age composition of working-age second-generation migrants and the rest of the native-born working-age population, by sex (percentage) 17 Figure 3.3. Distribution of working-age second-generation migrants and the rest of the native-born working-age population by education level and sex (percentage) 17 Figure 3.4. Distribution of second-generation migrant workers and other native-born workers in employment by occupational category and sex (percentage) 18 Figure A1. Share of second-generation migrants (based on alternative definition) in the working-age population in each of the sampled countries 44 Figure A2. Age composition of working-age second-generation migrants (based on alternative definition) and the rest of the native-born working-age population, by sex (percentage) 45 Figure A3. Distribution of working-age second-generation migrants (based on alternative definition) and the rest of the native-born working-age population by education level

tive definition) and the rest of the native-born working-age population, by sex (percentage) 45 Figure A3. Distribution of working-age second-generation migrants (based on alternative definition) and the rest of the native-born working-age population by education level and sex (percentage) 45 Figure A4. Distribution of second-generation migrant workers (based on alternative definition) and other native-born workers in employment by occupational category and sex (percentage) 46 Figure A5. Earnings distribution (based on hourly wages) of second-generation migrant wage employees, by region or country (percentage) 46 Figure A6. Earnings distribution (based on monthly self-employment income) of self-employed second-generation migrants, by region or country (percentage) 47 Figure A7. Average number of weekly hours worked by second-generation migrants who are wage employees versus other native born wage employees, by sex and country 4805 ILO Working Paper 141 List of Tables Table 4.1. Effect of being a second-generation migrant on the probability of labour force participation, unemployment and wage employment, by country (percentage points) 23 Table 5.1. Effect of being a second-generation migrant on hourly wages (percentage) 30 Table 5.2. Effect of being a second-generation migrant on monthly self-employment income (percentage) 31 Table A1. National data sources used to analyse the employment and earnings outcomes of second-generation migrants 49 Table A2. Effect of being a second-generation migrant (based on alternative definition) on the probability of labour force participation, unemployment and wage employment, by country (percentage points) 50 Table A3. Effect of being a second-generation migrant on monthly wages (percentage) 52 Table A4. Effect of being a second-generation migrant (based on alternative definition) on hourly wages (percentage) 53 Table A5. Effect of being a second-generation migrant (based on alternative definition) on monthly wages (percentage) 54 Table A6. Effect of being a second-generation migrant (based on alternative definition) on

hourly wages (percentage) 53 Table A5. Effect of being a second-generation migrant (based on alternative definition) on monthly wages (percentage) 54 Table A6. Effect of being a second-generation migrant (based on alternative definition) on monthly self-employment income (percentage) 5506 ILO Working Paper 141 List of Boxes Box 4.1. Estimating the effect of being a second-generation migrant on the probability of selected labour outcomes 20 Box 4.2. Comparing the working hours of second-generation migrants and other native born workers 26 Box 5.1. Estimating the effect of being a second-generation migrant on the earnings from wage employment and self-employment 28 Box 6.1. International labour standards dealing with non-discrimination, equal treatment and wages 35 Box 6.2. How “race, colour and national extraction” are understood in the supervisory practice of the Committee of Experts on the Application of Conventions and Recommendations related to the Discrimination (Employment and Occupation) Convention, 1958 (No. 111) 36 Box 6.3. The legal and institutional framework in Luxembourg for combating ethnic and racial discrimination at work 3807 ILO Working Paper 141 X Introduction The integration of migrants and their children is not just a social goal – it is a cornerstone of economic growth and resilience. This is especially relevant given that second-generation migrants could become one of the fastest-growing segments of the labour force in many regions of the world. Such a trend is suggested, in particular, by projections indicating that immigration will be a major driver of population growth in an increasing number of countries over the course of this century (United Nations 2024). In that regard, second-generation migrants are set to play a crucial role in shaping the future of labour markets. As the children of migrants, they bring with them unique perspectives, skills and dynamism that foster innovation and increase productivity. It is therefore vital to acknowledge and address the specific labour market challenges faced by second-generation migrants. Existing studies have revealed how they experience disparities in

crucial role in shaping the future of labour markets. As the children of migrants, they bring with them unique perspectives, skills and dynamism that foster innovation and increase productivity. It is therefore vital to acknowledge and address the specific labour market challenges faced by second-generation migrants. Existing studies have revealed how they experience disparities in labour market outcomes and job stability compared to their native-born counterparts, pointing to barriers that can limit the realization of their full potential and their access to decent work. The economic and social integration of second-generation migrants is essential, in order not only to fulfil the mission of promoting decent work for all but also to ensure that no one is left behind in the pursuit of shared prosperity. Such integration is aligned with the objectives of the United Nations in terms of reducing inequality and promoting inclusive growth, making it a priority for building sustainable and harmonious societies.1 Further research on the labour market experience of second-generation migrants is of the utmost importance for designing effective policies to support their integration. A better understanding of the disparities in employment rates, earnings outcomes and employment status between second-generation migrants and the rest of the native-born population can help in tackling the barriers to successful participation in the labour market. Quantifying the extent of these disparities allows for targeted interventions that can enhance economic opportunities for this population group. This would not only advance the ILO’s efforts to promote decent work for all, but also have the potential to foster economic growth, social stability and the integration of migrant communities into the workforce. Adding to the modest body of literature on second-generation migrants, this paper accordingly examines their labour market outcomes through empirical analysis based on labour force survey data from 32 countries, specifically focusing on labour force participation, unemployment, wage employment and self-employment, and earnings. The analysis covers second-generation migrants in a broad set of European countries, Australia and the United States of America, thereby providing a comprehensive transnational comparison of labour market dynamics across various regions of the world. Importantly, the specific labour market outcomes of second-generation migrants are analysed here using methodologies that make it possible to take into account the specific socio-demoby providing a comprehensive transnational comparison of labour market dynamics across various regions of the world. Importantly, the specific labour market outcomes of second-generation migrants are analysed here using methodologies that make it possible to take into account the specific socio-demographic composition of this group, including education and age. This helps to narrow down the possible causes of the gaps observed when comparing the employment and earnings outcomes of second-generation migrants with those of the rest of the population. 1 This is particularly highlighted by the Sustainable Development Goals, which were adopted by the United Nations General Assembly in 2015. Specifically, Goal 10 (“Reduce inequalities within and among countries”) includes targets 10.2 and 10.3, which call, respectively, for promoting “the social, economic and political inclusion of all” and for ensuring equal opportunities and ending discrimination.08 ILO Working Paper 141 By employing similar econometric methodologies and definitions across a broad selection of countries, the present study seeks to identify common trends, while also shedding light on the discrepancies in labour market outcomes experienced by second-generation migrants. Such an approach ensures improved comparability and serves to highlight national differences, thereby contributing to a deeper and more nuanced understanding of the impacts of global migration policies. A further added value of this study is that it touches upon the integration of migrants and their families into the host economy. The structure of this working paper is as follows. Chapter 1 reviews the literature on second-generation migrants. Chapter 2 provides an overview of the data sources and surveys used, along with a detailed description of the methodology underlying the analysis. Chapter 3 presents descriptive statistics on the population of second-generation migrants across countries. Chapter 4 focuses on the employment outcomes of second-generation migrants, examining key labour market indicators while taking into account the specific socio-demographic composition of that population group. Chapter 5 offers an analysis of their wages and self-employment income. Chapter 6 highlights legal frameworks that are relevant to shaping the labour market outcomes of second-generation migrants. A series of concluding remarks round off the paper.09 ILO Working Paper 141 X 1 Literature review

population group. Chapter 5 offers an analysis of their wages and self-employment income. Chapter 6 highlights legal frameworks that are relevant to shaping the labour market outcomes of second-generation migrants. A series of concluding remarks round off the paper.09 ILO Working Paper 141 X 1 Literature review

In recent years, second-generation migrants have attracted considerable attention in academic discourse on account of the typical socio-economic challenges and opportunities that they experience compared with both their first-generation migrant parents and the rest of the native-born population. By “second generation” we mean the children of migrants who have themselves grown up and been educated in the countries of destination, often benefiting from the social and economic systems of these host countries in ways that their parents were unable to. While first-generation migrants may experience incremental improvements in their socio economic position over the course of their life cycle (improvements that are positively associated with the time lived in the destination country), much of the progress achieved by the migrant population tends to be intergenerational. In other words, substantial socio economic advances and social integration are likely to manifest themselves more markedly among the second generation. As noted by Waldinger, Lim and Cort (2007), many second-generation migrants are able to enjoy upward mobility, despite various challenges. Fertig and Schmidt (2001) conclude that second-generation migrants are, on the whole, better integrated than their parents. There are indeed strong theoretical grounds to suggest that members of the second generation are likely to achieve more favourable labour market outcomes. They generally receive a better education than their parents, exhibit greater integration into the labour market and attain higher job positions, all of which are signs of positive intergenerational mobility (Alba and Foner 2006; Algan et al. 2010; Abramitzky, Boustan and Eriksson 2014; Aydemir and Sweetman 2007). However, existing studies have also found that a relatively better labour market integration of second-generation migrants compared with the first generation cannot be taken for granted. In particular, the labour market outcomes of second-generation migrants in some countries have been obisting studies have also found that a relatively better labour market integration of second-generation migrants compared with the first generation cannot be taken for granted. In particular, the labour market outcomes of second-generation migrants in some countries have been observed to depend on the country of origin and on the strength of their parents’ attachment to that country (Corluy et al. 2015; Monscheuer 2023). A key factor underpinning intergenerational mobility is the accumulation of human capital. Immigrant groups with a high degree of transmission of human capital from parents to offspring improve their position on the labour market in the second generation (Hammarstedt and Palme 2012). Second-generation migrants are often better placed to acquire human capital as a result of early integration into the educational system of the host country. For example, achieving fluency in that country’s language – a major hurdle for first-generation migrants – comes more easily at school age than in late adulthood (Lippi-Green 1997). Second generation migrants are thus likely to exhibit superior linguistic skills compared with their parents, which, in turn, can enhance their employability and labour market integration. Furthermore, the educational opportunities available in developed countries – ranging from access to formal schooling all the way to higher education – are often significantly better than those in less developed countries. Lo Iacono and Demireva (2018) note that qualifications from the host country typically generate higher returns on the labour market than foreign qualifications. This effect tends to be more pronounced among, and has important implications for, second-generation migrant women, who usually experience worse labour opportunities than their male counterparts. Second generation migrants often adapt more quickly and exhibit better outcomes than their parents in the more supportive environment provided by the host country (Fleischmann and Dronkers 2007). The phenomenon of “intergenerational catch-up” – where the gap in educational attainment between immigrants and natives is reduced for the second-generation – can thus clearly be observed (Gries, Redlin and Zehra 2022). By seizing these opportunities, second-generation10 ILO Working Paper 141

2007). The phenomenon of “intergenerational catch-up” – where the gap in educational attainment between immigrants and natives is reduced for the second-generation – can thus clearly be observed (Gries, Redlin and Zehra 2022). By seizing these opportunities, second-generation10 ILO Working Paper 141 migrants can build up human capital, enabling them to achieve better labour market and economic outcomes than their parents (Haug 2005). If one parent is born in the host country, the outcome is even more favourable than when both parents are foreign-born, especially if it is the mother who is native-born (Rooth and Ekberg 2003). In addition to studies comparing second-generation migrants’ outcomes with those of their parents, there is a strand of the literature that examines the differences with respect to the rest of the native-born population. For instance, second-generation migrants in Switzerland have been found to be socially mobile, innovative and “over-performing” compared with the native Swiss (Haug 2005). With regard to education, an overwhelmingly successful integration of second-generation migrants has been observed in the United States, except in the case of some Hispanic groups (Cadena, Duncan and Trejo 2015). In line with these findings, a number of empirical studies have pointed to favourable labour market outcomes for second-generation migrants, often when comparing specific migrant groups with the native population. For example, in nineteenth century Argentina, first generation European immigrants experienced faster occupational upgrading than natives. The second-generation migrants outperformed natives in terms of literacy, occupational status and access to property, and attained higher rates of intergenerational mobility out of unskilled occupations (Pérez 2017).2 Studying only the male migrant population in the United States, Chiswick (1977) found that second-generation migrants earned more than the sons of native-born parents. More recently, second-generation Mexican Americans have been observed to exhibit higher levels of labour force attachment than blacks (Waldinger, Lim and Cort 2007). In Denmark, Gupta and Kromann (2014) found that second generation migrants with a secondary or primary school edcently, second-generation Mexican Americans have been observed to exhibit higher levels of labour force attachment than blacks (Waldinger, Lim and Cort 2007). In Denmark, Gupta and Kromann (2014) found that second generation migrants with a secondary or primary school education, in particular women, performed as well or better than their ethnic Danish “twins” (ethnic Danes with the same background facing similar labour markets) in terms of unemployment rates, job search periods and the tendency to accept lower-quality jobs. Maskileyson, Semyonov and Davidov (2021) found that economic immigrant males in Switzerland were able to attain higher income than a comparable Swiss majority group already in the first generation, whereas their female counterparts managed to do so only in the second generation. However, several studies have also revealed the heterogeneity of second-generation migrants’ labour market outcomes. For instance, employment rates for second-generation migrants in Belgium were found to be hardly better than those for first-generation migrants, though there was considerable variation in labour market outcomes among the second generation depending on the country of origin (Corluy et al. 2015). A study focusing on Germany indicates that most male second-generation migrants experience much higher unemployment than native Germans, even when taking into account the differences in human capital, and that there is substantial heterogeneity across national origin groups (Luthra 2010). Another study based on German data has highlighted that, at the transition from primary to secondary school, second-generation migrants receive worse grades and teacher recommendations for secondary-school tracks than natives, suggesting that immigrants are disproportionately affected by prevailing social inequalities (Lüdemann and Schwerdt 2013). Moreover, the authors provide evidence that these inequalities are having a negative impact on the future labour market performance of second-generation migrants. In the Netherlands, second-generation migrants generally achieve lower educational outcomes than their native Dutch peers, with significant variation depending on the country of origin of the immigrant parents (van Ours and Veenman 2003). With regard to small businesses,

are having a negative impact on the future labour market performance of second-generation migrants. In the Netherlands, second-generation migrants generally achieve lower educational outcomes than their native Dutch peers, with significant variation depending on the country of origin of the immigrant parents (van Ours and Veenman 2003). With regard to small businesses, 2 To undertake this study on migrants’ economic performance during the period of mass migration in Argentina, the author was able to link males across the 1869 and 1895 national censuses, allowing for a longitudinal analysis of the outcomes of these individuals (see (Pérez 2017) for a detailed description of the methodology).11 ILO Working Paper 141 Efendic, Andersson and Wennberg (2016) find that Swedish firms run by second-generation migrants from member countries of the Organisation for Economic Co-operation and Development (OECD) exhibit higher growth rates than those run by natives, whereas the reverse is true of firms run by second-generation migrants from non-OECD countries, which suggests that “economic integration in terms of small business growth [among] immigrants in Sweden is characterized by segmented rather than universal assimilation.”3 In other words, immigrants and their children from countries that closely resemble the host country achieve social and economic integration more quickly than those from less similar countries, and this has various implications for the growth of small firms. Furthermore, other studies have highlighte