Segmented paths of welfare assimilation

This paper investigates the extent to which first-generation immigrants in the Netherlands undergo segmented paths of welfare assimilation and its underlying mechanism. Using unique longitudinal panel administrative data (2007-2015) based on the entire Dutch population from Statistics Netherlands (CBS), we estimate the trajectories of immigrant welfare utilization over the working-age life course, which is employed as an indicator of economic marginalization, vis-à-vis those of two base groups from the native populations representing different economic segments of the host country, namely: average Dutch natives and Dutch natives with low education level. The results show that, while mainstream assimilation is the dominant trend, it is not a common path for all. The risk of persistent marginalization exists and concentrates among first-generation immigrants characterized by structural and human capital disadvantages, despite their aspiration to integrate and notable degrees of upward mobilities. The worst scenario projected is a lack of assimilation to neither segment, suggesting prospective emergence of an ethnic underclass at the bottom of the economic ladder. The main policy implications are twofold. First, automatic closing of the immigrant-native gap over time should not be presumed if a level playing field is not provided for all regardless of their type of immigration and ethnic background. Second, the need for distinction between immigration policy and refugee policy should not be obscured by the consolidation of immigrants as one homogenous group, as systematic discrepancy is being observed between refugees and other types of migrants in both the patterns and mechanisms of welfare assimilation.

JEL Classification: H53, J6, I38, C23, J15

Keywords: welfare assimilation, segmented assimilation, first-generation immigrants, dynamic correlated random effects probit model