Foreign occupational credentials on the German Labour Market

In today’s globalised world, Germany is an economically successful country and an attractive destination for migrants. Previous research has shown that foreigners fare less well on the German labour market than natives. Much attention has been paid to lower individual endowments of migrants as well as discrimination by employers. However, these results relate to past migration flows into Germany which mainly consisted of unskilled migrants. In a globalised world, skilled migration between EU-countries and non-EU-countries has been growing both in numbers and in its importance, for example, to meet labour shortages. A major problem which skilled migrants face is the transferability of foreign human capital. Besides language barriers foreign certificates play a major role in determining their economic integration. The problem of transferability is tightened by aspects of Germany’s distinct occupational system. While foreign school systems are more or less transparent and assessable, the vocational training systems differ greatly from country to country and are, hence, hardly comparable.

If we focus on unregulated occupations, the question arises how firms in Germany deal with foreign occupational certificates. This is relevant as employers are the central gatekeeper when migrants try to find employment that matches their training. There is a number of arguments why employers could consider foreign occupational certificates as not equivalent to their German counterparts. From a signalling point of view, in situations with incomplete information employers will use readily available and easily understandable information on an applicant’s productivity. Occupational certificates serve as such signals, given that certificates are familiar and trustworthy. If employers are not familiar with foreign vocational training systems, their information value is much lower. In this case, productivity of foreign applicants is more difficult to assess; consequently their applications are more likely disregarded. In a more general approach, one could also suggest that employers recognise the level of foreign occupation-specific human capital as low. As a result, productivity of foreign applicants might be assessed as lower and their applications would be screened out.

Yet, little is known about the role of employers as central gatekeepers for the labour market integration of migrants as most of the empirical literature focuses on foreign workers. There is a considerable lack of research on the question how firms and employers deal with foreign occupational credentials. We seek to close this gap by proposing a project which is based on an experimental instrument, the so-called factorial survey. Employers will be interviewed with this instrument in order to measure under which conditions a foreign occupational credential is taken into consideration within the application process. The basic idea is to present hypothetical applicants to executive managers and enquire the chances that the presented applicants will be invited for a job interview. In our study the information on the applicant will be experimentally (that is randomly) varied by the use of a factorial survey design.

To understand the role of occupational certificates we focus on comparable foreign applicants with and without foreign occupational credentials. The questions are: How do firms deal with foreign credentials and which role do they play in hiring decisions? Answering these questions will lead to a more comprehensive understanding of labour market integration of skilled migrants, which also proves relevant in the context of handling labour shortages.

Prof. Dr. Martin Abraham (University of Erlangen-Nuremberg)
Dr. Andreas Damelang (University of Erlangen-Nuremberg)

Sabine Ebensperger (University of Erlangen-Nuremberg)
Felix Stumpf (University of Erlangen-Nuremberg)