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Skill Production Regimes and Immigrant Labor Market Integration

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Immigrant Labor Market Integration
IRENA KOGAN

Abstract
In recent years, Western countries have been experiencing a significant increase
in both humanitarian and economic immigration. With the number of migrants,
the challenges of integration have also surged. In consequence, host countries
have invested a considerable amount of resources in comprehensive and effective
immigrant integration policies. Various integration measures, such as foreign
credential recognition or education and (re-)training, have been implemented to
help immigrants with their transition into the host country’s labor market. The
success of such policies, we argue, depends not only on their extent and coverage
but also on whether they are compatible with other institutional characteristics
of the host countries. This contribution hence asks to what extent host countries’
immigrant integration policies aligned with these countries’ skill production
regimes channel immigrants into the labor market and consequently are responsible
for the cross-national differences in immigrants’ economic integration. We expect
that immigrants, particularly those with a less marketable status (e.g., refugees or
asylum seekers), should have higher incentives to acquire host-country-specific
education or to have their source country education recognized in countries that
lay a stronger emphasis on highly specific vocational skills. They also should
have higher labor market returns on their investments in countries with more
vocationally oriented education systems (such as in Germany and Austria) as
opposed to countries with more generally oriented education systems (such as
Ireland and the United Kingdom).

CHALLENGES OF IMMIGRANT LABOR MARKET INTEGRATION
International migration is one of the major global challenges of the current
century. Western countries have recently experienced a surge in immigration
from the Middle East and North Africa, also known as refugee crisis, with
Europe and particularly Germany being major destinations. Humanitarian
migration channels including family reunifications are likely to remain at
the top of the scientific and political agendas in the future. Furthermore, in
recent decades, industrialized countries have increasingly been competing
Emerging Trends in the Social and Behavioral Sciences.
Robert Scott and Marlis Buchmann (General Editors) with Stephen Kosslyn (Consulting Editor).
© 2017 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

for highly skilled immigrants from all over the world, with the United States,
Canada, and Australia being the leading net beneficiaries and—in the European context—the United Kingdom and Germany profiting most in absolute
numbers (Widmaier & Dumont, 2011). The bulk of highly educated migrants
in the OECD comes from the developing world, with one third stemming
from Asia, predominantly India (Arslan et al., 2014).
In light of the increasing humanitarian as well as economic migrations,
host countries spend considerable efforts to help newcomers with their
transition into the host country’s labor market, for example, by providing
various integration measures, such as foreign credential recognition or education and (re-)training. Despite these efforts, there is considerable variation
in the extent of immigrants’ labor market integration. Some countries are
notoriously known for particular difficulties newcomers have to experience
in order to adequately integrate into host country labor markets as well
as for immigrants’ persistent unemployment and overqualification. In
other countries, immigrant labor market insertion seems to work smoother
(Fleischmann & Dronkers, 2010; Heath & Cheung, 2007; Kogan, 2007; Van
Tubergen, Maas, & Flap, 2004). These various patterns prompt the question
why some countries are more successful than others in both preparing
immigrants for and providing them with work.
In search of answers, scholars have looked mainly at the impact of
host country characteristics, for example, immigration and integration policies, labor markets, educational systems, and welfare regimes
(Kogan, 2007; Reitz, 1998; Sassen, 1991). In order to explain why countries differ with regard to immigrants’ labor market integration, we
have to scrutinize whether host countries’ immigrant labor market
integration policies are successful, that is, enable efficient utilization
of immigrants’ skills and transferability of their credentials (Kogan,
2016a). However, it is important to look not just at the integration
policies but also at their interaction with other host countries’ institutional characteristics. Consequently, one of the guiding questions in
this research is to what extent integration policies, aligned with host
countries’ skill production regimes, channel immigrants’ labor market
integration.
In pursuit of this question, it is essential to address the micro-theoretical
foundations of why immigrants’ skills and credentials might be discounted
in a new host country context and how this could be remedied. However, it is
equally important to take a close look at relevant institutions—skill production regimes and labor market types—that have received extensive scholarly
attention in the past with regard to explaining other societal phenomena,
such as school-to-work transitions. Linking micro-theoretical mechanisms
with macro-level conditions should enable us to formulate some exemplary

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hypotheses regarding possible institutional effects of immigrant integration.
As our empirical case study illustrates, confronting theory with empirical
data is often a challenge. Still, a great deal can be learned from the analyses presented here, which can be seen as a prelude to an upcoming research
program.
EDUCATIONAL CREDENTIALS IN THE CONTEXT OF MIGRATION: A
MICRO-THEORETICAL APPROACH
Full utilization of immigrants’ labor market potential and avoidance of
societal exclusion are important goals on the way to immigrant integration
into receiving societies. Hence, it is important to understand why immigrants might experience labor market difficulties in general and problems
with the transferability of their skills and credentials into a new context in
particular.
The dominant pattern of immigrant economic integration is that immigrants arriving in a new country face initial difficulties: they are often
downgraded occupationally and earn lower wages than natives of comparable socioeconomic characteristics (Borjas, 1994; Chiswick, 1979). One
of the obvious explanations for this is that skills and resources—human,
social, and cultural capital—are of limited value because of the difficulties in their transferability from distant cultural, social, and institutional
contexts and in their applicability in more individualistic and credentialist
receiving societies (Kogan, Kalter, Liebau, & Cohen, 2011). Circumstances of
migration might also play a role and determine the nature of immigrants’
resources: those who have an opportunity to carefully plan their migration
move—mostly economic migrants—are more likely to possess ready-to-use
skills and marketable qualifications. Refugees and asylum seekers, by
virtue of the circumstances of their escape from war-torn regions or flight
from political, religious, or ethnic persecution, are less likely to possess
immediately transferable skills and valid educational certificates.
Most newcomers—irrespective of their migration status—find their foreign
credentials or skills of little value and are likely to experience occupational
disadvantages. This is particularly the case when applying for a job, where
immigrants might fall into the trap of informational discrimination (Cain,
1986). Employers generally use credentials to verify if the candidate has the
necessary job prerequisites and to determine whether the salary and status of
the open position are suited to the candidate. Consequently, immigrants here
are at a disadvantage due to the employers’ lack of information on the foreign
educational credentials. One way to overcome the employers’ uncertainties is
to increase the possibility of evaluating foreign credentials and therefore the
amount of reliable information available during the recruitment process. This

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can be achieved, for example, through recommendations or official certificates
of recognition.
Another instrument to improve the labor market prospects of immigrants
is post-migration human capital accumulation. According to human capital theory, immigrants’ productivity is likely to be enhanced if the host country
invests in human capital through education and training, especially when it
comes to professional knowledge and host country language skills (Becker,
1964). From the signaling perspective, host country education can serve as
a signal to employers, indicating immigrant’s perseverance and trainability
(Spence, 1973). Therefore, the informational value of the credentials reduces
the uncertainty factors in the recruitment process. However, the compensation of this occupational disadvantage for immigrants will only be successful if employers actually use these officially recognized foreign certificates
or rely on host-country education credentials in their recruitment decision
and if they favor them over foreign educational certificates that lack official
approval.
To sum up our micro-theoretical considerations, immigrants whose qualifications are recognized in the host country and who have acquired host
country education as well as training are expected to attain employment
of higher occupational status. Host-country-specific and recognized educational qualifications should particularly pay off for refugees/asylum seekers
because of otherwise possible difficulties with the identification and evaluation of foreign qualifications among this vulnerable group.
SKILL PRODUCTION IN THE CONTEXT OF MIGRATION: A
MACRO-THEORETICAL APPROACH
Our next point of departure is that the structure of opportunities for immigrants to gain adequate returns on their education—which has been either
acquired in the host country or imported from abroad but recognized in the
receiving country—is likely to depend on the skill production regimes and the
education–job linkages in the host country.
The skill production regime approach attempts to incorporate arguments
about strategies of skill investment at the individual level and skill production at the country level into the welfare regime concept (Estevez-Abe,
Iversen, & Soskice, 2001). The main claim is that the ways in which workers
invest in their skills and the types of skills they subsequently possess (either
general, firm- or industry-specific skills) determine the set of their potential
advantages or vulnerabilities in the system of employment, unemployment,
and wage protection. Scholars generally distinguish two types of skill production regimes: liberal market economies (LMEs) and coordinated market
economies (CMEs) (Estevez-Abe et al., 2001; Hall & Soskice, 2001). While

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education in LMEs is usually structured along general skills and subjects,
CMEs rather provide highly specialized skills through dual vocational
training systems that combine workplace-based training in firms and
education in vocational schools. Consequently, the occupation-tailored skills
acquired within CMEs are less transferable than the more general skills
acquired within LMEs. Building on Estevez-Abe et al.’s (2001) idea of the
portability of skills, Busemeyer (2009) suggests a further subdivision within
CME countries between integrationist and differentiated skill regimes, with
Sweden (and its school-based vocational training) and Germany (with its
workplace-based vocational training) being their respective prototypes.
This further fine-graded differentiation comes closer to another approach to
occupational specificity of education systems and education–job linkages,
as proposed in the school-to-work transition literature (Müller & Kogan,
2010).
This approach makes a distinction between occupational labor markets
(OLMs) and internal labor markets (ILMs) (Marsden, 1999). In OLMs, job
matching is highly channeled through educational qualifications, that is,
jobs require appropriate skill levels. In contrast, labor market entry in ILM
systems is less dependent on educational credentials (Gangl, 2003). Contrasting patterns of employment entry in the two systems are generally found
among young people at the (upper-)secondary educational level, where
OLM countries typically have a stronger vocational element. OLM–ILM
differentiation seems to be equally applicable for post-secondary education
graduates as well (Matkovi´c & Kogan, 2012).
Both the classical skill production regime approach and the literature dealing with education–job linkages do not refer to the issue of immigrant skills
and their applicability in various institutional settings. More recent research
argues that immigrants with different types of training (general or specific)
and skill levels (both low and high) can be more easily accommodated in
LMEs (Menz, 2011, p. 538). CMEs, on the other hand, are predominantly
interested in accepting highly skilled immigrants, whose skills largely correspond to the domestic standards. However, Menz (2011) remains vague
as to whether immigrants are able to directly practice jobs that correspond
to their skill levels because of the importance of certification in determining
the portability of vocational skills in OLMs or differentiated CMEs. This certification might appear crucial for vocationally educated immigrants whose
credentials hardly match the standards of highly specialized vocational training, carried out in a dual framework of vocational schools and firms, as it is
practiced in typical OLM countries, such as Germany, Austria, and Switzerland, and in a limited number of other countries.
Building upon Kogan (2016b), we argue that informational discrimination
due to the lack of reliable evidence is more virulent if employers have

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

to rely strongly on educational credentials in the recruitment process. It
might therefore be a bigger issue in OLM/CME countries, where foreign
education hardly provides the same signals to employers as host country
education under any circumstances. Hence, immigrants who acquired
their education and training in the host country of the OLM/CME profile
after their migration should fare better in terms of occupational attainment
than those with unrecognized educational qualifications. At the same
time, the difference in occupational returns on skills acquired from a more
generally oriented educational system of the ILM/LME host countries
and immigrants’ unrecognized educational qualifications from abroad
should be smaller. With regard to educational recognition, a similar logic
applies: in countries in which educational systems send particularly strong
signals to employers, as in OLMs/CMEs, immigrants with educational
qualifications that are recognized in the host country should enjoy higher
returns on their education than migrants without recognized qualifications.
In ILMs/LMEs, in which education is perceived as less crucial for labor
market entry and skills are generally considered more portable, recognition
of foreign education should be less important for labor market success,
and the differences between immigrants with and without recognized
educational qualifications should be less pronounced. We further expect that
vulnerable immigrants, such as refugees and asylum seekers, in particular,
should profit more from training and accreditation within the OLM/CME
systems, where employers should be especially interested in obtaining any
clues in order to overcome information deficits associated with this group’s
educational resources.
On a country level, we argue that host countries have different incentives to
invest in the transferability of immigrants’ education. From the macro interpretation of the human capital theory, we expect more efforts on behalf of the
OLM/CME countries to invest in vocational education and training as well
as in accreditation of credentials among the immigrant population. These
should consequently lead to higher proportions of immigrants acquiring host
country education or training and applying for accreditation of their credentials. In sum, we claim that immigrant integration policies will ensure more
effective labor market integration among immigrants only if they match the
nature of the skill production and labor market setting in the respective host
country.
ILLUSTRATING INSTITUTIONAL EMBEDDEDNESS OF IMMIGRANTS’
INTEGRATION
Empirical research that links skill production regimes, immigrant integration
policies, and immigrants’ economic integration is scarce. One exception is

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a study by Kogan (2016b), which, however, does not differentiate between
the various immigrant statuses (economic, family, refugee) when discussing
the role of integration measures in immigrant occupational attainment.
Hence, a new empirical case study has been carried out in order to illustrate
how integration policies interact with skill production regimes and whether
differentiated returns are observed among immigrants of different status
with regard to recognized and newly acquired educational qualifications in
OLM/CME and ILM/LME countries.
Similar to Kogan (2016b), this empirical illustration is based on the
micro-level data of the European Union Labor Force Survey (EULFS) ad
hoc module on the labor market situation of migrants (2008) and focuses
on immigrants aged 20–64 with maximum 10 years of residence in the
host country. The analyses are restricted to immigrants in four countries:
Austria and Germany (as typical representatives of OLM/CME regimes),
and Ireland and the United Kingdom (as ideal cases of ILM/LME regimes).
The following categories of immigrants are in focus: those who arrived with
employment intentions (economic migrants), asylum seekers or refugees
(immigrants seeking international protection), family migrants (including
those arriving for family formation or reunification), and others (including
student migrants). The question whether immigrants have used facilities
for establishing what the highest educational qualification equates to in the
host country encompasses the following categories: attained host country
education, gained recognition of foreign credentials, failed to have foreign
credentials recognized, never tried to have foreign credentials recognized,
and had no need for recognition.
ARE INVESTMENTS IN IMMIGRANTS’ HUMAN CAPITAL HIGHER
IN THE OLM/CME CONTEXT?
Our theoretical expectations that investments in host country education and
training as well as recognition attempts should be higher in OLM/CME
countries cannot be substantiated when confronted with the EULFS 2008
ad hoc module data. On all indicators of investments in transferability
of skills and education, the ILM/LME countries Ireland and the United
Kingdom perform better. In these countries, the proportion of immigrants
with host country education is somewhat higher, the share of immigrants
with successfully recognized educational qualifications is substantially
higher, and the amount of immigrants with no recognition or no need for
recognition is lower.
Compared to other categories of migrants, economic migrants are less
likely to obtain host country education in both ILM/LME and OLM/CME
countries. Furthermore, almost half of all economic migrants (somewhat

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

fewer in ILM/LME countries) report no necessity for any educational
recognition. Regarding those with educational recognition, ILM/LMEs
and OLM/CMEs are relatively similar, although slightly more economic
immigrants in ILM/LME countries have their educational qualifications
recognized. At the same time, slightly more immigrants in ILM/LME
countries report not to possess any recognized educational qualifications, which is largely because of never having applied for a recognition
procedure.
Refugees have the highest share of host country education among all three
categories of migrants within the ILM/LME context. In the OLM/CME context, substantially fewer refugees obtain host country education or possess
recognized educational qualifications. The trends in recognition, rejection,
and acquisition of host country education among family migrants in
OLM/CME countries are rather similar to those observed among refugees.
In the ILM/LME setting, refugees and family migrants are much more
different with regard to their education. While more refugees than family
migrants possess host country education, more family migrants possess
educational qualifications recognized in the host country context. At the
same time, considerably more family immigrants see no necessity in having
their education recognized.
This allows us to conclude that, contrary to our expectations about higher
incentives to have foreign education credentials recognized and attain host
country education in the OLM/CME countries, much fewer immigrants
tend to do so. The differences are particularly glaring among immigrants
in stronger need for meaningful educational signals, such as refugees or
asylum seekers but also family migrants. It has to be noted, however,
that both ILM/LME and OLM/CME countries have accepted relatively
few immigrants with refugee status between 1998 and 2008 (which is also
reflected in the rather small number of respective cases in our data), and
that situation might have changed in times of more significant refugee
inflow.
DO IMMIGRANTS’ INVESTMENTS IN HUMAN CAPITAL PAY OFF
MORE IN TERMS OF ATTAINED OCCUPATIONS IN THE OLM/CME
CONTEXT?
Now, the question arises why so few immigrants in OLM/CME countries
make use of credential recognition or invest in schooling and training in
the host countries. Can this be due to the insufficiently high rewards? Will
we observe differences in returns to host country education and recognized
foreign education among immigrants of different status? Is there evidence
for the theoretically expected country group differences? To answer these

Skill Production Regimes and Immigrant Labor Market Integration

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questions, we carry out OLS regression analyses predicting the occupational
status of the current employment, which we capture by the International
Socio-Economic Index of Occupational Status (ISEI) (Ganzeboom, De Graaf,
& Treiman, 1992) scale.1
With regard to the total sample of immigrants and the sample of economic
migrants, we observe no significant differences in returns on host country
education and recognized educational qualifications between ILM/LME and
OLM/CME countries. In both groups of countries, immigrants with clearer
signals of their education (achieved through either recognition or acquisition
of host country schooling) attain jobs with higher occupational status than
those who do not possess recognized educational qualifications. The ISEI
premium is particularly pronounced for economic migrants when it comes
to returns on host country education in OLM/CME countries. In ILM/LME
countries, the pay-off for recognized and host-country-specific education is
rather similar.
More substantial cross-national differences are observed among humanitarian migrants. While refugees reap benefits from their recognized
education and host country education (the latter effect is, however, not
statistically significant) in the OLM/CME countries, no similar trends
are noticeable in the ILM/LME countries. Among family migrants, host
country education pays off on the labor market in OLM/CME countries,
whereas successful recognition increases the ISEI of the current occupation
in the ILM/LME contexts. Summa summarum, we observe cross-national
differences in favor of OLM/CME countries with regard to returns
on successful recognition among refugees and host country education
among family migrants. Accordingly, our expectation is largely confirmed:
host-country-specific education and training hold higher pay-offs for more
vulnerable immigrants in terms of occupational status in OLM/CME
countries than in ILM/LME countries.
SUMMARY AND OUTLOOK
In light of the continuing migration flows, the challenges of immigrants’
integration have become ever more pressing. Host countries are in search of
effective ways to help immigrants acquire resources necessary to navigate
in the host country labor market and to make newcomers attractive for
1. The main independent variable is the educational situation in the host country, captured through
three categories: possessing host country education, possessing recognized educational qualifications, and
not possessing recognized educational qualifications (i.e., never applied for accreditation or failed to have
their credentials recognized). Other covariates include sociodemographic variables such as gender and
marital status, immigration characteristics such as ethnic origin, age at migration, years since migration,
immigrants’ participation in language courses, and labour market training programmes, and the type of
residence permit.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

employers. Host country education and training as well as educational
credentials officially recognized in the host country might be helpful in
this regard and increase immigrants’ opportunities of attaining gainful
employment. Numerous studies have shown the labor market benefits of
country-specific human capital (Cohen-Goldner & Eckstein, 2010; Ferrer &
Riddell, 2008; Kogan, 2012). Building on Kogan (2016b), we here argued
that integration policies should not only be tailored to the needs of the labor
market but also accord with the host countries skill production regimes in
order to be effective. In countries with a stronger vocational specificity of
the education system, greater emphasis on occupation-specific skills, and
tighter links between education providers and employers (as in OLM/CME
countries) signals provided by educational credentials should be particularly
strong and occupation specific. In such contexts, employers might have
difficulties in assessing immigrants’ credentials if these are acquired abroad.
In OLM/CME countries, it should hence be worthwhile for immigrants,
particularly for those with a less marketable status (e.g., refugees or asylum
seekers), to acquire host-country-specific education or to have their source
country education recognized. In countries with a less strong and less
specific vocational element in the education system and fewer established
links between education providers and firms (like in ILM/LME countries),
immigrants without host-country-specific credentials should experience less
pronounced disadvantages.
Our empirical illustration of immigrants’ occupational attainment in
the typical OLM/CME countries Germany and Austria and in the typical
ILM/LME countries Ireland and the United Kingdom delivered some
not entirely unequivocal insights. For economic migrants, we hardly
find any differences across the two groups of countries with respect to
occupational attainment; similarly few differences are found with regard
to host-country-specific human capital accumulation. Despite apparently
higher returns on recognized as well as acquired education and training
among humanitarian immigrants, much fewer of them possess education acquired or recognized in the host country in OLM/CMEs than
in ILM/LMEs. In the latter, however, the lack of host-country-specific
qualifications is not necessarily a handicap for refugees’ or family
migrants’ occupational attainment, although many more of them acquire
host-country-specific credentials. Overall—albeit not always entirely
consistent—the presented empirical evidence is in favor of the thesis
that host country education and recognized educational qualifications of
humanitarian migrants are better rewarded in OLM/CME systems. A
smoother access to host country education and the destruction of accreditation barriers for foreign-source credentials hence represent a key element
to enhance the labor market prospects of immigrants, including more

Skill Production Regimes and Immigrant Labor Market Integration

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vulnerable ones, such as refugees, particularly in countries with educational
systems that tend to emphasize vocational skills. A puzzle about the lack of
concordance between the investment patterns and labor market rewards on
host-country-specific education remains, nevertheless, unsolved and calls
for further scrutiny.
It certainly has to be noted that our illustrative example should be
approached with a necessary degree of caution, as results reported here are
by no means causal effects of acquisition/recognition of education. Panel
data analyses focusing on within-individual variations could contribute to
avoid the problem of endogeneity, which is likely to occur in such a type of
research question. Furthermore, large-N multilevel approaches or studies
exploring within-country institutional change in a (natural) experimental
design are necessary in the future to provide conclusive causal evidence
with regard to integration policy effects and the role of institutions in
micro-level processes, which is not possible with a small-N study at country
level such as this one. Another perspective worth exploring is a study of the
employers’ perceptions of immigrants’ qualifications and their approaches
in assessing educational signals. Further research along the lines proposed
above should provide definitive answers to the following questions: (i) Do
OLM/CME systems reward educational credentials that are recognized
or required within the host country more favorably than ILM/LMEs? (ii)
Do higher returns on host-country-specific educational qualifications have
something to do with a more pronounced selectivity of those who succeeded
in acquiring host-country-specific human capital in these countries? (iii) Will
growing awareness of the importance of educational credential recognition
as well as the acquisition of education and training in western receiving
countries lead to higher proportions of immigrants who acquire host country
education and succeed in translating their qualifications into favorable labor
market positions?
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Van Tubergen, F., Maas, I., & Flap, H. (2004). The economic incorporation of immigrants in 18 western societies: Origin, destination, and community effects. American Sociological Review, 69, 701–724.
Widmaier, S., & Dumont, J. C., (2011). Are recent immigrants different? A new profile of
immigrants in the OECD based on DIOC 2005/06. OECD Social, Employment and
Migration Working Papers, No. 126, OECD Publishing, Paris. Retrieved from doi:
10.1787/5kg3ml17nps4-en

IRENA KOGAN SHORT BIOGRAPHY
Irena Kogan holds a chair in comparative sociology at the University of
Mannheim. She is Secretary-Treasurer of the European Consortium for
Social Research, a member of the European Academy of Sociology, an
associate editor of the European Sociological Review and a board member
of the Transition in Youth Network. Her main interests are in the areas of
ethnicity and migration, immigrant integration, social stratification, and
transitions from school-to-work. She is the author of a number of articles in
international journals dealing with these topics. Currently Irena Kogan is
co-directing the German part of the “Children of Immigrants Longitudinal
Survey”.
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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

The Impact of Bilingualism on Cognition (Psychology), Ellen Bialystok
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and Cydney H. Dupree
Immigrant Children and the Transition to Adulthood (Sociology), Roberto G.
Gonzales and Benjamin J. Roth
The Reorganization of Work (Sociology), Charles Heckscher
Immigrant Sociocultural Adaptation, Identification, and Belonging
(Sociology), Sarah J. Mahler
Emotion and Intergroup Relations (Psychology), Diane M. Mackie et al.
Immigrant Health Paradox (Sociology), Kyriakos S. Markides and Sunshine
Rote
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Language Proficiency and the Integration of Immigrant Students in the
Education System (Education), Petra Stanat and Aileen Edele
Assimilation and Its Discontents (Sociology), Min Zhou; Skill Production Regimes and
Immigrant Labor Market Integration
IRENA KOGAN

Abstract
In recent years, Western countries have been experiencing a significant increase
in both humanitarian and economic immigration. With the number of migrants,
the challenges of integration have also surged. In consequence, host countries
have invested a considerable amount of resources in comprehensive and effective
immigrant integration policies. Various integration measures, such as foreign
credential recognition or education and (re-)training, have been implemented to
help immigrants with their transition into the host country’s labor market. The
success of such policies, we argue, depends not only on their extent and coverage
but also on whether they are compatible with other institutional characteristics
of the host countries. This contribution hence asks to what extent host countries’
immigrant integration policies aligned with these countries’ skill production
regimes channel immigrants into the labor market and consequently are responsible
for the cross-national differences in immigrants’ economic integration. We expect
that immigrants, particularly those with a less marketable status (e.g., refugees or
asylum seekers), should have higher incentives to acquire host-country-specific
education or to have their source country education recognized in countries that
lay a stronger emphasis on highly specific vocational skills. They also should
have higher labor market returns on their investments in countries with more
vocationally oriented education systems (such as in Germany and Austria) as
opposed to countries with more generally oriented education systems (such as
Ireland and the United Kingdom).

CHALLENGES OF IMMIGRANT LABOR MARKET INTEGRATION
International migration is one of the major global challenges of the current
century. Western countries have recently experienced a surge in immigration
from the Middle East and North Africa, also known as refugee crisis, with
Europe and particularly Germany being major destinations. Humanitarian
migration channels including family reunifications are likely to remain at
the top of the scientific and political agendas in the future. Furthermore, in
recent decades, industrialized countries have increasingly been competing
Emerging Trends in the Social and Behavioral Sciences.
Robert Scott and Marlis Buchmann (General Editors) with Stephen Kosslyn (Consulting Editor).
© 2017 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

1

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

for highly skilled immigrants from all over the world, with the United States,
Canada, and Australia being the leading net beneficiaries and—in the European context—the United Kingdom and Germany profiting most in absolute
numbers (Widmaier & Dumont, 2011). The bulk of highly educated migrants
in the OECD comes from the developing world, with one third stemming
from Asia, predominantly India (Arslan et al., 2014).
In light of the increasing humanitarian as well as economic migrations,
host countries spend considerable efforts to help newcomers with their
transition into the host country’s labor market, for example, by providing
various integration measures, such as foreign credential recognition or education and (re-)training. Despite these efforts, there is considerable variation
in the extent of immigrants’ labor market integration. Some countries are
notoriously known for particular difficulties newcomers have to experience
in order to adequately integrate into host country labor markets as well
as for immigrants’ persistent unemployment and overqualification. In
other countries, immigrant labor market insertion seems to work smoother
(Fleischmann & Dronkers, 2010; Heath & Cheung, 2007; Kogan, 2007; Van
Tubergen, Maas, & Flap, 2004). These various patterns prompt the question
why some countries are more successful than others in both preparing
immigrants for and providing them with work.
In search of answers, scholars have looked mainly at the impact of
host country characteristics, for example, immigration and integration policies, labor markets, educational systems, and welfare regimes
(Kogan, 2007; Reitz, 1998; Sassen, 1991). In order to explain why countries differ with regard to immigrants’ labor market integration, we
have to scrutinize whether host countries’ immigrant labor market
integration policies are successful, that is, enable efficient utilization
of immigrants’ skills and transferability of their credentials (Kogan,
2016a). However, it is important to look not just at the integration
policies but also at their interaction with other host countries’ institutional characteristics. Consequently, one of the guiding questions in
this research is to what extent integration policies, aligned with host
countries’ skill production regimes, channel immigrants’ labor market
integration.
In pursuit of this question, it is essential to address the micro-theoretical
foundations of why immigrants’ skills and credentials might be discounted
in a new host country context and how this could be remedied. However, it is
equally important to take a close look at relevant institutions—skill production regimes and labor market types—that have received extensive scholarly
attention in the past with regard to explaining other societal phenomena,
such as school-to-work transitions. Linking micro-theoretical mechanisms
with macro-level conditions should enable us to formulate some exemplary

Skill Production Regimes and Immigrant Labor Market Integration

3

hypotheses regarding possible institutional effects of immigrant integration.
As our empirical case study illustrates, confronting theory with empirical
data is often a challenge. Still, a great deal can be learned from the analyses presented here, which can be seen as a prelude to an upcoming research
program.
EDUCATIONAL CREDENTIALS IN THE CONTEXT OF MIGRATION: A
MICRO-THEORETICAL APPROACH
Full utilization of immigrants’ labor market potential and avoidance of
societal exclusion are important goals on the way to immigrant integration
into receiving societies. Hence, it is important to understand why immigrants might experience labor market difficulties in general and problems
with the transferability of their skills and credentials into a new context in
particular.
The dominant pattern of immigrant economic integration is that immigrants arriving in a new country face initial difficulties: they are often
downgraded occupationally and earn lower wages than natives of comparable socioeconomic characteristics (Borjas, 1994; Chiswick, 1979). One
of the obvious explanations for this is that skills and resources—human,
social, and cultural capital—are of limited value because of the difficulties in their transferability from distant cultural, social, and institutional
contexts and in their applicability in more individualistic and credentialist
receiving societies (Kogan, Kalter, Liebau, & Cohen, 2011). Circumstances of
migration might also play a role and determine the nature of immigrants’
resources: those who have an opportunity to carefully plan their migration
move—mostly economic migrants—are more likely to possess ready-to-use
skills and marketable qualifications. Refugees and asylum seekers, by
virtue of the circumstances of their escape from war-torn regions or flight
from political, religious, or ethnic persecution, are less likely to possess
immediately transferable skills and valid educational certificates.
Most newcomers—irrespective of their migration status—find their foreign
credentials or skills of little value and are likely to experience occupational
disadvantages. This is particularly the case when applying for a job, where
immigrants might fall into the trap of informational discrimination (Cain,
1986). Employers generally use credentials to verify if the candidate has the
necessary job prerequisites and to determine whether the salary and status of
the open position are suited to the candidate. Consequently, immigrants here
are at a disadvantage due to the employers’ lack of information on the foreign
educational credentials. One way to overcome the employers’ uncertainties is
to increase the possibility of evaluating foreign credentials and therefore the
amount of reliable information available during the recruitment process. This

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

can be achieved, for example, through recommendations or official certificates
of recognition.
Another instrument to improve the labor market prospects of immigrants
is post-migration human capital accumulation. According to human capital theory, immigrants’ productivity is likely to be enhanced if the host country
invests in human capital through education and training, especially when it
comes to professional knowledge and host country language skills (Becker,
1964). From the signaling perspective, host country education can serve as
a signal to employers, indicating immigrant’s perseverance and trainability
(Spence, 1973). Therefore, the informational value of the credentials reduces
the uncertainty factors in the recruitment process. However, the compensation of this occupational disadvantage for immigrants will only be successful if employers actually use these officially recognized foreign certificates
or rely on host-country education credentials in their recruitment decision
and if they favor them over foreign educational certificates that lack official
approval.
To sum up our micro-theoretical considerations, immigrants whose qualifications are recognized in the host country and who have acquired host
country education as well as training are expected to attain employment
of higher occupational status. Host-country-specific and recognized educational qualifications should particularly pay off for refugees/asylum seekers
because of otherwise possible difficulties with the identification and evaluation of foreign qualifications among this vulnerable group.
SKILL PRODUCTION IN THE CONTEXT OF MIGRATION: A
MACRO-THEORETICAL APPROACH
Our next point of departure is that the structure of opportunities for immigrants to gain adequate returns on their education—which has been either
acquired in the host country or imported from abroad but recognized in the
receiving country—is likely to depend on the skill production regimes and the
education–job linkages in the host country.
The skill production regime approach attempts to incorporate arguments
about strategies of skill investment at the individual level and skill production at the country level into the welfare regime concept (Estevez-Abe,
Iversen, & Soskice, 2001). The main claim is that the ways in which workers
invest in their skills and the types of skills they subsequently possess (either
general, firm- or industry-specific skills) determine the set of their potential
advantages or vulnerabilities in the system of employment, unemployment,
and wage protection. Scholars generally distinguish two types of skill production regimes: liberal market economies (LMEs) and coordinated market
economies (CMEs) (Estevez-Abe et al., 2001; Hall & Soskice, 2001). While

Skill Production Regimes and Immigrant Labor Market Integration

5

education in LMEs is usually structured along general skills and subjects,
CMEs rather provide highly specialized skills through dual vocational
training systems that combine workplace-based training in firms and
education in vocational schools. Consequently, the occupation-tailored skills
acquired within CMEs are less transferable than the more general skills
acquired within LMEs. Building on Estevez-Abe et al.’s (2001) idea of the
portability of skills, Busemeyer (2009) suggests a further subdivision within
CME countries between integrationist and differentiated skill regimes, with
Sweden (and its school-based vocational training) and Germany (with its
workplace-based vocational training) being their respective prototypes.
This further fine-graded differentiation comes closer to another approach to
occupational specificity of education systems and education–job linkages,
as proposed in the school-to-work transition literature (Müller & Kogan,
2010).
This approach makes a distinction between occupational labor markets
(OLMs) and internal labor markets (ILMs) (Marsden, 1999). In OLMs, job
matching is highly channeled through educational qualifications, that is,
jobs require appropriate skill levels. In contrast, labor market entry in ILM
systems is less dependent on educational credentials (Gangl, 2003). Contrasting patterns of employment entry in the two systems are generally found
among young people at the (upper-)secondary educational level, where
OLM countries typically have a stronger vocational element. OLM–ILM
differentiation seems to be equally applicable for post-secondary education
graduates as well (Matković & Kogan, 2012).
Both the classical skill production regime approach and the literature dealing with education–job linkages do not refer to the issue of immigrant skills
and their applicability in various institutional settings. More recent research
argues that immigrants with different types of training (general or specific)
and skill levels (both low and high) can be more easily accommodated in
LMEs (Menz, 2011, p. 538). CMEs, on the other hand, are predominantly
interested in accepting highly skilled immigrants, whose skills largely correspond to the domestic standards. However, Menz (2011) remains vague
as to whether immigrants are able to directly practice jobs that correspond
to their skill levels because of the importance of certification in determining
the portability of vocational skills in OLMs or differentiated CMEs. This certification might appear crucial for vocationally educated immigrants whose
credentials hardly match the standards of highly specialized vocational training, carried out in a dual framework of vocational schools and firms, as it is
practiced in typical OLM countries, such as Germany, Austria, and Switzerland, and in a limited number of other countries.
Building upon Kogan (2016b), we argue that informational discrimination
due to the lack of reliable evidence is more virulent if employers have

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

to rely strongly on educational credentials in the recruitment process. It
might therefore be a bigger issue in OLM/CME countries, where foreign
education hardly provides the same signals to employers as host country
education under any circumstances. Hence, immigrants who acquired
their education and training in the host country of the OLM/CME profile
after their migration should fare better in terms of occupational attainment
than those with unrecognized educational qualifications. At the same
time, the difference in occupational returns on skills acquired from a more
generally oriented educational system of the ILM/LME host countries
and immigrants’ unrecognized educational qualifications from abroad
should be smaller. With regard to educational recognition, a similar logic
applies: in countries in which educational systems send particularly strong
signals to employers, as in OLMs/CMEs, immigrants with educational
qualifications that are recognized in the host country should enjoy higher
returns on their education than migrants without recognized qualifications.
In ILMs/LMEs, in which education is perceived as less crucial for labor
market entry and skills are generally considered more portable, recognition
of foreign education should be less important for labor market success,
and the differences between immigrants with and without recognized
educational qualifications should be less pronounced. We further expect that
vulnerable immigrants, such as refugees and asylum seekers, in particular,
should profit more from training and accreditation within the OLM/CME
systems, where employers should be especially interested in obtaining any
clues in order to overcome information deficits associated with this group’s
educational resources.
On a country level, we argue that host countries have different incentives to
invest in the transferability of immigrants’ education. From the macro interpretation of the human capital theory, we expect more efforts on behalf of the
OLM/CME countries to invest in vocational education and training as well
as in accreditation of credentials among the immigrant population. These
should consequently lead to higher proportions of immigrants acquiring host
country education or training and applying for accreditation of their credentials. In sum, we claim that immigrant integration policies will ensure more
effective labor market integration among immigrants only if they match the
nature of the skill production and labor market setting in the respective host
country.
ILLUSTRATING INSTITUTIONAL EMBEDDEDNESS OF IMMIGRANTS’
INTEGRATION
Empirical research that links skill production regimes, immigrant integration
policies, and immigrants’ economic integration is scarce. One exception is

Skill Production Regimes and Immigrant Labor Market Integration

7

a study by Kogan (2016b), which, however, does not differentiate between
the various immigrant statuses (economic, family, refugee) when discussing
the role of integration measures in immigrant occupational attainment.
Hence, a new empirical case study has been carried out in order to illustrate
how integration policies interact with skill production regimes and whether
differentiated returns are observed among immigrants of different status
with regard to recognized and newly acquired educational qualifications in
OLM/CME and ILM/LME countries.
Similar to Kogan (2016b), this empirical illustration is based on the
micro-level data of the European Union Labor Force Survey (EULFS) ad
hoc module on the labor market situation of migrants (2008) and focuses
on immigrants aged 20–64 with maximum 10 years of residence in the
host country. The analyses are restricted to immigrants in four countries:
Austria and Germany (as typical representatives of OLM/CME regimes),
and Ireland and the United Kingdom (as ideal cases of ILM/LME regimes).
The following categories of immigrants are in focus: those who arrived with
employment intentions (economic migrants), asylum seekers or refugees
(immigrants seeking international protection), family migrants (including
those arriving for family formation or reunification), and others (including
student migrants). The question whether immigrants have used facilities
for establishing what the highest educational qualification equates to in the
host country encompasses the following categories: attained host country
education, gained recognition of foreign credentials, failed to have foreign
credentials recognized, never tried to have foreign credentials recognized,
and had no need for recognition.
ARE INVESTMENTS IN IMMIGRANTS’ HUMAN CAPITAL HIGHER
IN THE OLM/CME CONTEXT?
Our theoretical expectations that investments in host country education and
training as well as recognition attempts should be higher in OLM/CME
countries cannot be substantiated when confronted with the EULFS 2008
ad hoc module data. On all indicators of investments in transferability
of skills and education, the ILM/LME countries Ireland and the United
Kingdom perform better. In these countries, the proportion of immigrants
with host country education is somewhat higher, the share of immigrants
with successfully recognized educational qualifications is substantially
higher, and the amount of immigrants with no recognition or no need for
recognition is lower.
Compared to other categories of migrants, economic migrants are less
likely to obtain host country education in both ILM/LME and OLM/CME
countries. Furthermore, almost half of all economic migrants (somewhat

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

fewer in ILM/LME countries) report no necessity for any educational
recognition. Regarding those with educational recognition, ILM/LMEs
and OLM/CMEs are relatively similar, although slightly more economic
immigrants in ILM/LME countries have their educational qualifications
recognized. At the same time, slightly more immigrants in ILM/LME
countries report not to possess any recognized educational qualifications, which is largely because of never having applied for a recognition
procedure.
Refugees have the highest share of host country education among all three
categories of migrants within the ILM/LME context. In the OLM/CME context, substantially fewer refugees obtain host country education or possess
recognized educational qualifications. The trends in recognition, rejection,
and acquisition of host country education among family migrants in
OLM/CME countries are rather similar to those observed among refugees.
In the ILM/LME setting, refugees and family migrants are much more
different with regard to their education. While more refugees than family
migrants possess host country education, more family migrants possess
educational qualifications recognized in the host country context. At the
same time, considerably more family immigrants see no necessity in having
their education recognized.
This allows us to conclude that, contrary to our expectations about higher
incentives to have foreign education credentials recognized and attain host
country education in the OLM/CME countries, much fewer immigrants
tend to do so. The differences are particularly glaring among immigrants
in stronger need for meaningful educational signals, such as refugees or
asylum seekers but also family migrants. It has to be noted, however,
that both ILM/LME and OLM/CME countries have accepted relatively
few immigrants with refugee status between 1998 and 2008 (which is also
reflected in the rather small number of respective cases in our data), and
that situation might have changed in times of more significant refugee
inflow.
DO IMMIGRANTS’ INVESTMENTS IN HUMAN CAPITAL PAY OFF
MORE IN TERMS OF ATTAINED OCCUPATIONS IN THE OLM/CME
CONTEXT?
Now, the question arises why so few immigrants in OLM/CME countries
make use of credential recognition or invest in schooling and training in
the host countries. Can this be due to the insufficiently high rewards? Will
we observe differences in returns to host country education and recognized
foreign education among immigrants of different status? Is there evidence
for the theoretically expected country group differences? To answer these

Skill Production Regimes and Immigrant Labor Market Integration

9

questions, we carry out OLS regression analyses predicting the occupational
status of the current employment, which we capture by the International
Socio-Economic Index of Occupational Status (ISEI) (Ganzeboom, De Graaf,
& Treiman, 1992) scale.1
With regard to the total sample of immigrants and the sample of economic
migrants, we observe no significant differences in returns on host country
education and recognized educational qualifications between ILM/LME and
OLM/CME countries. In both groups of countries, immigrants with clearer
signals of their education (achieved through either recognition or acquisition
of host country schooling) attain jobs with higher occupational status than
those who do not possess recognized educational qualifications. The ISEI
premium is particularly pronounced for economic migrants when it comes
to returns on host country education in OLM/CME countries. In ILM/LME
countries, the pay-off for recognized and host-country-specific education is
rather similar.
More substantial cross-national differences are observed among humanitarian migrants. While refugees reap benefits from their recognized
education and host country education (the latter effect is, however, not
statistically significant) in the OLM/CME countries, no similar trends
are noticeable in the ILM/LME countries. Among family migrants, host
country education pays off on the labor market in OLM/CME countries,
whereas successful recognition increases the ISEI of the current occupation
in the ILM/LME contexts. Summa summarum, we observe cross-national
differences in favor of OLM/CME countries with regard to returns
on successful recognition among refugees and host country education
among family migrants. Accordingly, our expectation is largely confirmed:
host-country-specific education and training hold higher pay-offs for more
vulnerable immigrants in terms of occupational status in OLM/CME
countries than in ILM/LME countries.
SUMMARY AND OUTLOOK
In light of the continuing migration flows, the challenges of immigrants’
integration have become ever more pressing. Host countries are in search of
effective ways to help immigrants acquire resources necessary to navigate
in the host country labor market and to make newcomers attractive for
1. The main independent variable is the educational situation in the host country, captured through
three categories: possessing host country education, possessing recognized educational qualifications, and
not possessing recognized educational qualifications (i.e., never applied for accreditation or failed to have
their credentials recognized). Other covariates include sociodemographic variables such as gender and
marital status, immigration characteristics such as ethnic origin, age at migration, years since migration,
immigrants’ participation in language courses, and labour market training programmes, and the type of
residence permit.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

employers. Host country education and training as well as educational
credentials officially recognized in the host country might be helpful in
this regard and increase immigrants’ opportunities of attaining gainful
employment. Numerous studies have shown the labor market benefits of
country-specific human capital (Cohen-Goldner & Eckstein, 2010; Ferrer &
Riddell, 2008; Kogan, 2012). Building on Kogan (2016b), we here argued
that integration policies should not only be tailored to the needs of the labor
market but also accord with the host countries skill production regimes in
order to be effective. In countries with a stronger vocational specificity of
the education system, greater emphasis on occupation-specific skills, and
tighter links between education providers and employers (as in OLM/CME
countries) signals provided by educational credentials should be particularly
strong and occupation specific. In such contexts, employers might have
difficulties in assessing immigrants’ credentials if these are acquired abroad.
In OLM/CME countries, it should hence be worthwhile for immigrants,
particularly for those with a less marketable status (e.g., refugees or asylum
seekers), to acquire host-country-specific education or to have their source
country education recognized. In countries with a less strong and less
specific vocational element in the education system and fewer established
links between education providers and firms (like in ILM/LME countries),
immigrants without host-country-specific credentials should experience less
pronounced disadvantages.
Our empirical illustration of immigrants’ occupational attainment in
the typical OLM/CME countries Germany and Austria and in the typical
ILM/LME countries Ireland and the United Kingdom delivered some
not entirely unequivocal insights. For economic migrants, we hardly
find any differences across the two groups of countries with respect to
occupational attainment; similarly few differences are found with regard
to host-country-specific human capital accumulation. Despite apparently
higher returns on recognized as well as acquired education and training
among humanitarian immigrants, much fewer of them possess education acquired or recognized in the host country in OLM/CMEs than
in ILM/LMEs. In the latter, however, the lack of host-country-specific
qualifications is not necessarily a handicap for refugees’ or family
migrants’ occupational attainment, although many more of them acquire
host-country-specific credentials. Overall—albeit not always entirely
consistent—the presented empirical evidence is in favor of the thesis
that host country education and recognized educational qualifications of
humanitarian migrants are better rewarded in OLM/CME systems. A
smoother access to host country education and the destruction of accreditation barriers for foreign-source credentials hence represent a key element
to enhance the labor market prospects of immigrants, including more

Skill Production Regimes and Immigrant Labor Market Integration

11

vulnerable ones, such as refugees, particularly in countries with educational
systems that tend to emphasize vocational skills. A puzzle about the lack of
concordance between the investment patterns and labor market rewards on
host-country-specific education remains, nevertheless, unsolved and calls
for further scrutiny.
It certainly has to be noted that our illustrative example should be
approached with a necessary degree of caution, as results reported here are
by no means causal effects of acquisition/recognition of education. Panel
data analyses focusing on within-individual variations could contribute to
avoid the problem of endogeneity, which is likely to occur in such a type of
research question. Furthermore, large-N multilevel approaches or studies
exploring within-country institutional change in a (natural) experimental
design are necessary in the future to provide conclusive causal evidence
with regard to integration policy effects and the role of institutions in
micro-level processes, which is not possible with a small-N study at country
level such as this one. Another perspective worth exploring is a study of the
employers’ perceptions of immigrants’ qualifications and their approaches
in assessing educational signals. Further research along the lines proposed
above should provide definitive answers to the following questions: (i) Do
OLM/CME systems reward educational credentials that are recognized
or required within the host country more favorably than ILM/LMEs? (ii)
Do higher returns on host-country-specific educational qualifications have
something to do with a more pronounced selectivity of those who succeeded
in acquiring host-country-specific human capital in these countries? (iii) Will
growing awareness of the importance of educational credential recognition
as well as the acquisition of education and training in western receiving
countries lead to higher proportions of immigrants who acquire host country
education and succeed in translating their qualifications into favorable labor
market positions?
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10.1787/5kg3ml17nps4-en

IRENA KOGAN SHORT BIOGRAPHY
Irena Kogan holds a chair in comparative sociology at the University of
Mannheim. She is Secretary-Treasurer of the European Consortium for
Social Research, a member of the European Academy of Sociology, an
associate editor of the European Sociological Review and a board member
of the Transition in Youth Network. Her main interests are in the areas of
ethnicity and migration, immigrant integration, social stratification, and
transitions from school-to-work. She is the author of a number of articles in
international journals dealing with these topics. Currently Irena Kogan is
co-directing the German part of the “Children of Immigrants Longitudinal
Survey”.
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