Skills proficiency

and the labour-market

outcomes of immigrants

Adult Skills
in Focus #12
ADULT SKILLS
IN FOCUS

Foreign-born workers earn lower wages than their native-born peers. Immigrants are also more likely to
work in low-skilled and less prestigious occupations.

A large portion of the poor labour-market performance of foreign-born workers can be explained by
their backgrounds – in particular the country where they acquired their education – combined with their
fluency in the host country language and their literacy and numeracy proficiency.

Foreign-born adults feel their skills are underutilised in some countries. This has considerable
consequences for the successful socio-economic integration of immigrants.

Across OECD countries, immigrants have weaker literacy and educational qualification, but literacy skills among foreign-
numeracy skills than their native-born peers. The Survey of born adults lag behind those who were native-born even when
Adult Skills (PIAAC) finds that the gap in literacy proficiency they were educated in the destination country (Figure 1). This
between the two groups is about 24 score points – equivalent Adult Skills in Focus provides new evidence on the labour-
to roughly 3.5 years of schooling (OECD, 2017). A large part market implications of this disparity in skills between the two
of the gap can be explained by mastery of the host country’s groups, and examines how foreign-born workers’ skills relate
language and where immigrants earned their highest to their performance in the labour market.

Figure 1 / Distribution of literacy test scores, by immigrant status

Native-born Immigrants educated at destination Immigrants educated elsewhere

Score points
400

350

300

250

200

150

100

50
1 25 50 75 99
Percentile

Note: Fifty score points in literacy correspond to about one standard deviation in the overall distribution of proficiency.
Source: Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/data/.

2 ADULT SKILLS IN FOCUS / FEBRUARY 2020 / #12 © OECD 2020

Immigrants earn significantly less than native-born adults
Foreign-born adults often have higher educational immigrants with a local qualification, and 16% higher
attainment than the native-born population. For than for those with a foreign qualification (Figure 2). The
example, immigrants are more likely to hold a university earnings’ gap is most pronounced in the United States,
degree than native-born adults in North America, and where foreign-born adults educated abroad earn only
in Australia, Denmark, Ireland, New Zealand, Norway, 72% of the hourly wage of their native-born peers. The
Singapore and Sweden. Yet, on average, native-born earnings disadvantage among immigrants remains even
workers’ hourly wages are 5% higher than those of when educational attainment is taken into account.

Figure 2 / Median hourly earnings

Native-born Immigrants educated at destination Immigrants with foreign qualification

USD
25

20

15

10

0
Ireland

Finland

Sweden

New Zealand

Spain

Israel
Flanders (Belgium)

Netherlands

United States

Singapore

France

Greece
Canada

Austria

Slovenia

Estonia

Lithuania
Norway

England/N.Ireland (UK)

Italy
Denmark

Countries and economies are ranked in descending order of the median hourly earnings of the native-born.
Source: Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/data/.

Foreign-born adults are often employed in low-skilled and low-prestige jobs

One of the reasons for the earnings gap lies in differences However, skills proficiency and fluency in the language
in the occupations of foreign-born and native-born used in the PIAAC test explain a large part of these
workers. Immigrants are often over-represented in jobs differences in occupations. This is especially true
that do not require high levels of education. Overall, for tertiary-educated workers. Once individual
foreign-born adults who were educated outside the host characteristics (such as gender and age) and skills
country are more than twice as likely as their native- proficiency have been taken into account, tertiary-
born peers to be employed in low-skilled occupations educated native- and foreign-born adults both have an
(Figure 3). In certain countries – such as Canada, Italy and equal probability of getting a high-skilled job. In other
New Zealand – immigrants with foreign qualifications are words, all other things being equal, if tertiary-educated
five times as likely to work in low-skilled jobs as native- workers all have the same level of skills, their country
born adults. of origin does not affect the likelihood of working in

© OECD 2020 ADULT SKILLS IN FOCUS / FEBRUARY 2020 / #12 3

ADULT SKILLS
IN FOCUS

Figure 3 / Share of workers in low-skilled occupations

Immigrants educated at destination Immigrants with foreign qualification Native-born

%
40

35

30

25

20

15

10

0
Spain

Flanders (Belgium)

Finland

England/N.Ireland (UK)

Ireland

Sweden

Israel

New Zealand
United States

Netherlands
Greece

France

Singapore
Austria

Slovenia

Lithuania

Estonia

Canada
Italy

Norway
Denmark

Note: Low-skilled occupations are defined as those occupations under the ISCO code category 9, i.e. “elementary occupations”.
Countries and economies are ranked in descending order of the share of foreign-born workers with foreign qualifications in low-skilled occupations.
Source: Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/data/.

more prestigious jobs1. In contrast, skills and language more likely than native-born adults to feel overskilled
proficiency play a smaller – but still significant – role in for their job, and those with foreign qualifications are
explaining occupational differences among less highly 8 percentage points more likely. Similar situations exist in
educated people, with other unobserved factors (such as Denmark and Singapore. Self-reported skills mismatches
networks, discrimination or information asymmetries) are very important for the socio-economic integration of
also having an important role. immigrants, given that they not only affect their earnings,
but also their overall satisfaction and well-being.
In several countries, immigrants report that their skills
Subjective mismatches are a sign of the labour market’s
are underutilised (Figure 4). For instance, foreign-born
inability to tap fully into immigrants’ potential, resulting
adults educated in Sweden are 4 percentage points
in a loss of economic opportunities

1
Prestigious jobs are defined based on the socio-economic status of occupations. See OECD (2018) for a detailed definition of the prestige of jobs.

4 ADULT SKILLS IN FOCUS / FEBRUARY 2020 / #12 © OECD 2020

Figure 4 / Share of workers who feel that their skills are underutilised

Native-born Immigrants educated at destination Immigrants with foreign qualification

100

90

80

70

60

50
Spain

Israel

Ireland

New Zealand

England/N.Ireland (UK)

Sweden

Flanders (Belgium)

Finland
United States

Netherlands
Greece

Singapore

France
Austria

Slovenia

Canada

Lithuania

Estonia
Italy

Norway

Denmark

Countries and economies are ranked by the share of native-born workers who feel that their skills are underutilised.
Source: Survey of Adult Skills (PIAAC) (2012, 2015), www.oecd.org/skills/piaac/data/.

© OECD 2020 ADULT SKILLS IN FOCUS / FEBRUARY 2020 / #12 5

 Across the OECD, the labour-market performance of foreign-born-adults tends
The to lag behind that of the native-born. Immigrants are not only more likely to be
bottom unemployed or inactive, but they also earn less and work in lower-skilled jobs.

line Differences in skills proficiency, language spoken and country of education

explain a large part – albeit not the entirety – of these observed gaps. Policies
should therefore aim to provide immigrants with effective language tuition,
adult education and training programmes in order to ensure the successful
integration of foreign-born workers into host economies.

> CONTACT: Michele Tuccio (michele.tuccio@oecd.org); (edu.piaac@oecd.org)

> FOR MORE OECD (2018), Skills on the Move: Migrants in the Survey of Adult Skills, OECD Skills
INFORMATION: Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264307353-en.

OECD (2017), «Why are immigrants less proficient in literacy than native-born adults?»,
Adult Skills in Focus, No. 6, OECD Publishing, Paris, https://doi.org/10.1787/30b23d82-en.

> VISIT: www.oecd.org/skills/piaac

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