Historical Background—Immigration into Sweden
Hansen and Lofstrom 77
previously in the literature. The self-selection of immigrants coming to a relatively generous welfare state is likely to be one of the reasons for this result. We also find
that immigrants reduce welfare-participation rates with time spent in the new coun- try. Although refugees display substantially higher participation rates upon arrival
compared to nonrefugee immigrants, they assimilate out of welfare much more rap- idly than their nonrefugee counterparts. We also find that roughly 50 percent of the
observed increase in welfare utilization in Sweden in the 1990s can be attributed to the increases in both unemployment and immigration.
The result, that immigrants assimilate out of welfare, appears to contradict previ- ous findings in regards to the assimilation of immigrants’ welfare utilization. How-
ever, even after 20 years in the host country we find that both refugee and nonrefugee immigrants show significantly higher social-assistance-participation rates than statis-
tically similar natives—by between 8 and 10 percentage points. These numbers are quite close to the findings of Borjas and Hilton 1996 and Baker and Benjamin
1995. These results suggest that immigrants in a relatively generous welfare state, like Sweden, display similar welfare participation behavior as immigrants in less
generous welfare states, like the United States, relative to natives after having spent some time in the new host country.
The paper is organized in the following way. In Sections II and III we give back- ground information about immigration into Sweden and the social assistance pro-
gram. Section IV describes the data and variables while Section V depicts trends and differences, between immigrants and natives, in welfare participation. In Section
VI we test whether differences in welfare utilization can be explained by differences in socioeconomic characteristics. Assimilation issues are also analyzed in this sec-
tion. Finally, we conclude in Section VII.