The impact of immigration on unemployment and wages : a study of the Norwegian labor market

Abstract

According to the United Nations Population Fund (UNFPA), there were 191 million people living outside their country of birth in 2005. Also, net immigration accounted for three quarters of population growth during 2000-2005 in developed regions. The increase in net migration has lead to diverging perspectives on the issue. Accordingly, debate has increased about the benefits and/or harm from immigration. A suitable study of the impacts of immigration may enlighten the current debate. This thesis studies the impact of immigration on wage and unemployment in Norway. I present a set of theories that explain the effect of immigration on the host economy. The theories presented will be assessed from a Norwegian perspective. The study also includes a summary of Norwegian immigration and economy history with focus on the developments in 2001-2006. The summary forms the base for further analysis. Regression analysis was used to test the significance of changes in unemployment and wage using different independent variables. The results showed that the effects do not have enough statistical significance to say that immigration bids down wages and raises unemployment. After finding no statistical significance, a qualitative analysis and evaluation of the immigration and economic history of Norway is done to determine whether the changes in unemployment and wages during the period of study can be explained by changes in economic trends and indicators. The results presented have implications for the development of immigration policies. Thus, the current Norwegian immigration policies are evaluated and discussed to determine their wisdom or otherwise based on the statistical findings.