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Immigrant Assimilation and Welfare Participation

Do Immigrants Assimilate Into or Out of Welfare?

This paper analyzes differences in welfare utilization between immigrants and natives in Sweden using a large panel data set for the years 1990 to 1996. We find that immigrants use welfare to a greater extent than natives and that differences cannot be explained by observable characteristics. Welfare participation decreases with time spent in Sweden. Refugees assimilate out of welfare at a faster rate than nonrefugee immigrants, but neither group is predicted to reach parity with natives. Increases in unemployment and immigration, as well as the change in the composition of immigrants, contributed to the increase in welfare utilization in Sweden.