Labour market disadvantage or poor health upon arrival? An examination of the native–immigrant gap in early retirement on a disability pension

Abstract

Non-Western immigrants in Scandinavia have a higher risk of early retirement on a disability pension than natives, but the reasons are unclear. One theory is that increased demands for standardization, efficiency and productivity in advanced capitalist labour markets, such as the Scandinavian market, cause expulsion of the weakest and least qualified individuals from the labour market, including a disproportionate share of non-Western immigrants. Another theory is that non-Western immigrants already have poorer health than natives upon arrival in Scandinavia. This article examines the extent to which the native–immigrant gap in early retirement on a disability pension is explained by non-Western immigrants’ disadvantaged position in the labour market when pre-existing health differences are controlled for. To this end, we draw on Danish register data, including all disability pensions granted in 2003–2012 to natives and non-Western immigrants who arrived in Denmark in 1998. Our results suggest that a minor proportion of the native–immigrant gap in disability pensions is explained by non-Western immigrants’ health upon arrival, whereas the vast majority of the gap is explained by non-Western immigrants’ disadvantaged position in the labour market.