Tuesday, May 14, 2013

Malmö: A case-study in multiculturalism

Among major Scandinavian cities, Malmö has been affected most by multiculturalism. Approximately 41 percent of Malmös population consists of first or second generation immigrants. This is a fairly recent developement. In 1960 only around 5 percent of Malmö’s population were foreign born, similar number to the rest of Sweden at the time.

The large influx of immigrants makes Malmö a suitable “natural” experiment for investigating the aggregate effects of migration. Libertarians and the left argue that immigration benefits Sweden economically, increasing per capita growth and the standard of living. If this theory is true we should expect Malmö to perform well economically.

Malmö University professor Tapio Salonen has calculated interesting stats about Malmö, which I will in part rely on. For variables such as child poverty, Salonen has corrected for those who commute to and from Malmö (this adjustment only makes a minor difference).

Other than immigration, the most important development in Malmö in recent years is the Öresund-bridge to Denmark and the subsequent integration of the Copenhagen with Malmö. This has benefited the economy and has created a large number of high-skill jobs. Yet despite the new bridge, Malmö has had worse economic performance than Sweden as a whole.

* Growth: Eurostat estimates the per capita GDP of regions starting in 1995. Per capita annual growth rate 1995-2009:
Stockholm: 3.3%
Copenhagen: 3.0%
Sweden: 2.6%
Malmö: 2.0%



* Tax-base: Peter Santeson has calculated this graph of the tax-base, showing a deterioration of Malmös ability to finance the welfare state. The public sector in Malmö only functions because Malmö is being heavily subsidized by the rest of Sweden.



* Median Income: According to SCB, median earnings in Malmö were around the national average in 1991, but have stagnated compare to the rest Sweden since. While the growth rate of median personal income averaged 1.7% per year in Sweden, it was merely 0.7% in Malmö 1991-2011.


* Earnings of the poor: This graph by Tapio Salonens shows that the real income of low-income earners in Malmö has declined during the last two decades.
  


* Poverty rate: The relative poverty rate (defined as earning less than 60% of median income) in Malmö was the same as the national average in 1991, but is substantially higher than the national average today. 


* Income inequality: This graph by Tapio Salonens shows that income inequality has increased in Sweden and increased faster yet in Malmö.
 

 

* Employment: Two graphs by Tapio Salonens illustrate the employment situation in Malmö. The majority of foreign born working age adults in Malmö do not work. (Malmö has lower employment than the national average also when taking commuters into account.)



* Child Poverty rate: Between 1991-2010 the absolute child poverty rate in Sweden declined from about 15% to about 13%. During the same period Malmö’s child poverty rate increased from 25% to 33%. This gives Malmö the dubious honor of having the highest child-poverty rate among Sweden’s 290 municipalities.

* Welfare dependency:
According to Socialstyrelsen Malmö ranks second highest in terms of welfare (socialbidrag) per inhabitants among Sweden’s 290 municipalities.

* Crime: According to Brå, during the last decade Malmö has had a homocide rate of around 3.5 per 100.000 inhabitants. This is significantly higher than the Swedish national average, and not far from the American murder rate of 5 per 100.000 inhabitants (thought the statistical definitions are not identical). 

* Education: Malmö ranks 14th from the bottom in terms of school results among Sweden’s 290 municipalities. 


Keep in mind that the economic disaster outlined above occurred during a period in which Malmö benefited from the new bridge to Denmark. Without the bridge things would likely be even worse.

The dismal experience of Malmö undermines the theory that immigration has benefited the Swedish economy. The historical birthplace of the Social Democratic movement increasingly resembles a blighted American city in terms of segregation, poverty, crime and poor economic performance.
 

29 comments:

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  3. Thanks for these more or less unimpeachable data. However, libertarians and leftists can always - regardless of serious data that might confute their views - refer to the intolerant host populations that do not make enough efforts to accommodate immigrants. They can always refer to bad integration policies, and hand in hand with that all the spoiled latent potential of the new comers: if we just irrigate the seeds properly then the third world people will bloom like wild flowers in the north!

    In fact, the whole phenomenon is a sort of oracular reasoning, and religious people like Johan Norberg or Annie Lööf, among many other, can be quite hard to reason with. They have esoteric knowledge that they do not want to share with the rest of us.

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  4. It would be a good thing to differ refugees from immigrants in this statistics.

    One of Malmös leading politicians, Ilmar Reepalu have for almost a decade try to STOP "the EBO-law, that attracts low skilled refugees to Rosengård and other ghetto-like neighborhoods. It doesnt work, to many in too short time. But the national politicians haven't listened.

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  5. It's suggestive, but this is basically one observation. There could be any number of confounding factors explaining Malmö's poor performance. I don't see how you can claim that this "undermines the theory that immigration has benefited the Swedish economy" any more than you can claim that it undermines the theory that improved communications (such as a big bridge to Copenhagen) improves economic performance.

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    2. Your use of confounding factor, given that your argument are in statistical terms, doesn't make any sense at all.

      Further more: Copenhagen employs approximately 10% of the population in Malmö.

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  6. Fetter:

    Indeed since this was not a controlled experiment, any causal link is a matter of interpretation. This is why I refer to what happened as a case-study.

    However, the case for a causal link is stronger than you suggest. First of all, there are no major candidates for confounding effect that would explains Malmös decline during this period. During this period Malmö benefited from the bridge, and from a strong tendency towards urbanization (Stockholm, Gothenburg and Copenhagen had strong growth).

    More importantly, many of the poor outcomes mentioned above can be directly linked to the immigrant outcomes. Let me give you an example.

    The Child poverty rate of Malmö is 33%, the highest in the country. The Child poverty rate of immigrant children in Malmö is 50%, and native Swedish children merely 10%. So clearly in this case it is hard to argue that high child poverty is driven by anything else other than immigration. If high child poverty in Mamlö was caused by confounding factors (such as incompetent government) we would expect the native Swedish population to also have high poverty rates.

    The same is true for other issues I mention above (low employment etc.), you can directly link to the immigrant community.

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  8. Fair enough. But to the extent that immigrants are poorer than native Swedes (which I don't think that anybody is disputing), the child poverty rate would more or less mechanically increase with increased immigration. What libertarians and leftists have in mind when they say that immigration is economically beneficial is, I think, the idea that both native Swedes and immigrants are better off with immigration than without it, even though measures like poverty rates and GDP per capita might decrease. Reading your article again, I see that that may not have been exactly the idea you were criticizing, though.

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  9. Suppose half of the nation of Hypothetica bans immigration, and per-capita income grows from 100 to 180 (~3% over a generation). Suppose the other half invites income-50 immigrants, who then make up 40% of its population, and during the same generation their income grows to 80 while the natives' income grows to 200. The individual statistics indicate that everyone is doing better in the second half, but the aggregated per-capita income of 150 shows a disappointingly inferior 2% growth rate.

    This says bad things about aggregated statistics.

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  10. roystgnr:

    It is theoretically possible for the income of natives to rise as a consequence of immigration, even if the immigrants themselves are poor. Is this however a likely outcome?

    In welfare states such as Sweden, around one half of national income is shared (public sector). If you bring in lots of low-income people to a shared economy the standard of living of everyone declines. In addition, you get negative externalities, such as crime and inequality.

    There simply do not exist evidence of large aggregate gains for natives from low-skilled immigration. Low-skilled immigrants do not increase the rate of innovation, entrepreneurship or skill-intensity of the economy. (As a matter of fact, they probably lower it, since existing innovation is spread out over more people). The estimated gains from trade in the U.S due to immigration are fractions of one percent of GDP.

    Arguably, the biggest problem facing modern economies is a surplus of low-skilled workers for whom there is increasingly little demand in the labor market, due to technological chance.

    Sweden has several hundred thousand unskilled workers out of work already. Why would it lead to major gains for the economy to bring in more, given that we cannot find jobs for the unskilled we already have? Why would in lead to major gains for the economy if only 40% of immigrants in Malmö even work?

    The libertarian view of the economics of low-skilled immigration is best described as magical.

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  11. Assar Lindbeck förordar inte fri invandring.

    http://magasinetneo.se/artiklar/vinstfragan-ar-ett-sidospar/

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  12. article about rising anti-semitism in Malmö:

    http://www.dn.se/nyheter/sverige/malmos-judiska-liv-tynar-bort

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  13. I do not think it is correct to describe Malmö as "a suitable "natural” experiment for investigating the aggregate effects of migration"

    A natural experiment would have a control group, a city very similar to Malmö in all dimensions - but with no immigrants.

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  14. The requirement is hardly not "no immigrant". What makes Malmö interesting is the magnitude of immigration, with 41% of the population having foreign origin.

    We have plenty of cities that are comparable and who had less immigration than 41% of the population (e.g Gutenberg, Copenhagen). The rest of Sweden is also a reasonable control group, one that Malmö followed closely prior to recent demographic development.

    Would you like to offer a specific alternative explanation for Malmö's poor performance?

    When discussing causality, note that many of the problems in Malmö can be DIRECTLY linked to immigration (for example child poverty is 50% for foreign origin children in Malmö, 10% among ethnic Swedes in Malmö).

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  15. As someone actually living in Malmö, I can offer the following observations:
    * Every time I've been offered a shady cab ride (no taxes involved), the driver has been an immigrant.
    * Every time a service has been ludicrously under-priced, such as getting a haircut, or your car fixed, the proprietor was an immigrant.
    * Every time your read in the paper about significant amounts of illegal labourers being hired, the proprietor has been an immigrant.
    * Every time you walk into a convenience store that refuses to accept credit cards (no need for proper receipts) and selling products bought in big-name supermarkets (still labelled with their logo) and shady grey-imported stuff without proper EU markings, the proprietor is an immigrant.

    Avoiding taxes has always been a popular pasttime for certain Swedish businnes sectors, but in Malmö it is so out in the open it's not even funny. There is an enormous underground economic black hole in Malmö, sucking away tax money from a public sector in deep crisis. Trying to pretend that immigration has not had any effect whatsoever on this takes a special kind of liar.

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  16. It seems Stockholm has some issues too. This all seems vary similar to riots in Paris and London over the past decade.

    http://www.stuff.co.nz/world/europe/8701040/Stockholm-rioting-continues-after-shooting

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  17. Not all libertarians support immigration in the presence of a welfare state.

    A major problem is how problematic it is to discuss human biodiversity and how much bad information there is that fools people, such as Ron Unz's articles.

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  18. P.S

    If non-Swedish readers have questions about the ungoing social unrest, please write in comment section and I will attemp to respond.

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  19. Tino,

    I do have a question. Is "Parking Tickets Issued on Wrecks while Stockholm Burns" http://www.friatider.se/parking-tickets-issued-on-wrecks-while-stockholm-burns

    in any way an accurate portrayal of Sweden? Not literally. The picture is presumably correct. My question is whether the article captures the mindset of Sweden.

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  20. Yes and no.

    It is correct in the sense that Swedes are obsessed with following rules despite the circumstances, which I guess the bizarre incident illustrates. It is also correct that there is a dual society in these areas, a mix of Ghetto-anarchy and Nordic-order.

    It is not correct in the sense that it conveys the impression that Swedes do not care about the riots. People are very concerned. Most Swedes have puritan values and do not appreciate the media telling them that the we must “understand” the rioters who are merely asking for social justice. The police are not interfering because they don’t want to escalate the fight, not due to weakness. It a prudent strategy. The young, overwhelmingly criminal rioters are hardly concerned with economics politics as the left thinks. They are mainly angry at the police, who they believe disrespects them.

    Finally, the elite Message in Sweden is that the riots are not caused by immigration policy; they are caused by social problems. Most Swedes trust their elites and accept this illogical explanation (immigration is the only reason Sweden imported these social problems).

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