Making Integration Work? Facilitating Access to Occupational Recognition and Immigrants' Labor Market Performance

Immigrants perform worse in the labor market than natives, likely because of the low transferability of home-country professional certificates. The standardized recognition of professional certificates in the host country represents one policy for increasing their transferability.This paper investigates the effects of a large recognition reform in Germany on the labor market outcomes of non-EU immigrants.

The IAB-Discussion Paper shows that the reform was highly effective. It increased both the recognition applications of non-EU immigrants and their employment in regulated occupations, all of which require recognition. The reform also increased employment in the non-regulated occupations with the most recognition applications. These results are stable up to five years post-reform.

As the non-EU immigrants moved from low-wage and non-regulated occupations to higher-paid and regulated occupations, they could also improve their earnings. Furthermore, despite the larger inflow of non-EU immigrants into these occupations, the average wages for non-EU immigrants did not decrease post-reform.

The positive reform effects on employment of non-EU immigrants are mainly in health sector occupations (a booming sector in Germany), thereby possibly explaining why natives did not lose employment or earnings.

Yet the paper also finds effects of the reform in regions where the demand for health sector jobs is lower and for occupations outside the health care sector.

Taken together, the results of the study point to the importance of removing formal barriers to the transferability of foreign-acquired human capital. Improving recognition procedures in terms of both the administrative burden and access to information may be a cost-efficient policy for integrating immigrants into their host country’s labor market.

IAB Discussion Paper "Making Integration Work? Facilitating Access to Occupational Recognition and Immigrants' Labor Market Performance"