Immigration´s Effect on the Swedish Labor Market : - How did the refugee wave in 2015 affect the Swedish employment rates?

This essay study the impact of the increased immigration to Sweden caused by the refugee crisis in 2015. With the focus on how the increased number of immigrants affects the employment rate, empirical evidence can be found that contributes to this widely discussed subject. The analysis is made by observing the share of immigrants and the employment rate in each of the 290 municipalities during the years 2014 to 2018. An empirical analysis is conducted by using a combination of a pooled OLS model along with fixed effects model. The result of the pooled OLS model indicate on a negative relationship. This could potentially be explained by the fact that immigrants generally are drawn to regions where those with similar ethnic background already live. Due to technical reasons connected to this model, fixed effects are added. Contradicting the initial results, the relationship is now expected to be positive. An increased share of immigrants by 1 percent unit is expected to increase the employment rate by 0,49 percent. However, when control variables that take the characteristics of each municipalities into consideration is introduced, the impact of the share of immigrants drops significantly. The result found that an increased share of immigrants by 1 percent unit is expected to increase the employment rate by 0,11 percent. Even though the potential presence of correlation rather than causation, and the strong impact of the control variables, it can be stated that there is a positive relationship between the increased number of immigrants in the workforce and the employment rates within the Swedish municipalities. The findings in this paper will function as a reference point that proves both the public debate and policy makers with crucial information of the expected outcome on the labor market connected to immigration.