Disposable income differences between immigrants and natives in Sweden

This paper investigates whether there are differences in Sweden between immigrants and natives in disposable income and in the probability of having a low disposable income. By investigating disposable income and the probability of having a low disposable income, our study illuminates to what extent taxes and transfers in the Swedish welfare state manage to compensate for differences in income from work between immigrants and natives. The study shows that there are differences between different groups both in disposable income and in the probability of having a low disposable income and that these differences remain when we control for factors such as age, gender, education and civil status. Early immigrants from the Nordic countries have a higher disposable income than does the native population whereas recent immigrants have a substantially lower disposable income and a higher probability of remaining poor than both earlier immigrants and the native population. In summary, our study shows that the differences in disposable income between immigrants and natives are indeed smaller than the differences in income from work but that the differences are not completely counterbalanced through the tax and transfer system.