Stratification mechanisms in labour market matching of migrants

Abstract

I aim to challenge the standard framework in which systematic exclusion is mistakenly characterised as only a frictional phenomenon that fails to be captured in migrants’ labour market matching mechanisms. Societies organise and rank people in a hierarchical way, not only in terms of individual differences and characteristics but with respect to social groups and categories of people. These macro patterns systematically subject some migrant groups to different forms of exclusion. Social stratification, explained in terms of social identity-based institutional structures, organises labour markets into different destinations like clubs with sharply different sets of opportunities. It functions like a trap for migrants: it reinforces itself by reproducing systems of exclusion and creates dilemmas for migrants. Can migrants organise themselves to avoid such traps? I show that exclusion is endogenous to employment as a type of good in the standard goods typology. Treating different types of employment opportunities as being like clubs, I investigate how migrants join or create alternative employment clubs as a response to real or perceived exclusion from native employment clubs. If these alternative clubs are ‘sticky’ and discourage migrants from trying to join natives’ exclusive employment clubs, the trap becomes inescapable. For migrants to escape the stratification trap, employment should be seen not only as an investment but as a collective action problem structurally targeting exclusion.

1. Introduction

European Union policy institutions consider integrating migrants costly but an investment that benefits host countries in the long term.¹ Employment is widely acknowledged as one of the best instruments for migrants having better lives and thus a core part of their socio-economic integration into host societies (Council of the European Union, 2004; OECD/European Union, 2014; European Commission, 2017). Employment in integration policies, then, is a good in that it represents a means for integration and it is expected to turn integration costs into an investment for host countries.

How are migrants doing in terms of this employment good? Recent studies show that they are doing well but not as well as natives (Grubanov-Boskovic et al., 2017; OECD, 2018A, 2018B, 2019).² Why do migrants not match up with available employment opportunities even if their relocation was expected to provide them with such opportunities? What underlies the persistent gap between migrants and natives’ labour market outcomes? Is it only individual human capital differences, or is there also something more systematic and structural that causes and reinforces differences in outcomes? These studies argue that there is much left unexplained even after controlling for skills, education, and experience (Grubanov-Boskovic et al., 2017; OECD, 2018A, 2018B, 2019). Policies that aim to facilitate matching and overcome coordination problems are often based on observable skills. But the reason may be beyond observable differences in skills.

European institutions have begun to employ a new integration narrative, namely ‘inclusive integration’ that recognises the need for a broader understanding of integration beyond the reach of skills (e.g., European Commission, 2019). This relies on individual level solutions and the investment understanding that migrants’ employment is an integration good. But can it help explain enduring macro patterns in society that individuals encounter not necessarily due to their individual characteristics but due to their being members of certain social groups such as migrant, race and gender?

I argue that a systematic factor that remains unexplained both in the recent studies of migrants’ labour market performance and in the EU ‘inclusive integration narrative’ is social stratification.³ Social stratification has various definitions and explanations in social science and particularly sociology. A simple description is that societies organise and rank people in a hierarchical way, not in terms of individual differences in skills but with respect to groups and categories of people. In this paper, building upon Stratification Economics, I explain stratification in terms of social identity-based institutional structures.

My position is that stratification explained by social group identity dynamics generates a more realistic assessment of human capabilities in addition to individual skills and provides a systematic explanation of institutional structures which subject migrants to various forms of exclusion. Social stratification, in the form of exclusion or a perception of exclusion from opportunities, is a systematic sorting process that modifies labour market matching. Exclusion can occur either as an unexplained part of the differences between migrants and natives or as nested in the explained factors operating at different levels and layers of socio-economic systems. It is not, therefore, only employment based on individual skills that is instrumental to integration as the EU emphasises. Access to being employed, the type of employment available, and the perception of this access irrespective of social group identities are key factors for this good of integration.

Stratification functions like a trap for certain groups of people, particularly migrants. It reinforces itself by reproducing systems of exclusion and creates dilemmas for migrants. For instance, migrants need employment to integrate, but they need integration for better access to employment and being employed. Education is one of the key determinants for employment, but difficulties in finding employment limit access to education (OECD et al., 2016). Can migrants organise themselves to avoid such traps? What kind of institutional arrangements might turn the trap-like scenario into a circumstance in which integration is not only beneficial for them and society but also results in more equal and just opportunities for migrants?

In this paper, then, I aim to challenge the idea that skills-based matching explains migrants’ labour market integration. In the second section, I review the standard search and matching framework to analyse migrants’ predicted labour market performance. In this framework, systematic exclusion is mistakenly characterised as only a frictional phenomenon that fails to be captured in matching mechanisms. The third section explains social stratification in terms of how social identity-based institutional structures systematically subject migrants to different forms of exclusion. I show that exclusion is endogenous to employment as a type of good, using the standard goods typology to classify different types of employment goods. Exclusion in this account occurs not solely at the individual level but is constantly reinforced by how institutions affect different social groups. The fourth section discusses whether stratification is an inescapable trap for some social groups. I treat different types of employment opportunities as being like clubs and investigate how migrants join or create alternative employment clubs as a response to real or perceived exclusion from native employment clubs. If these alternative clubs are ‘sticky’ and discourage migrants from joining natives’ employment clubs, the trap becomes inescapable. This then suggests the failure in migrant integration through the labour market is a collective action problem associated with how societies organise labour markets into different destinations or clubs with sharply different sets of opportunities. The fifth section closes the paper, discussing how for migrants to get out of the stratification trap, employment should be seen not only as an investment but as a collective action problem about exclusion.

2. Frictional understanding in migrants’ labour market matching

Let us start with the standard economic answer to the question: What underlies the persistent gap between migrants and natives’ labour market outcomes? Migrants’ performance in labour market is traditionally analysed using the human capital approach to explain earnings in terms of skills (see Mincer, 1958; Sjaastad, 1962; Becker, 1964; Chiswick, 1978). The approach transfers individualistic maximisation-seeking behaviour from immigration to integration theory by assuming migrants are investors in human capital.

Search-and-matching theory in economics, on the other hand, helps explain how job seekers match open vacancies based on their preferences and characteristics, especially in the human capital terms. Migrants’ matching with jobs can be explained with a similar logic (e.g., Burnazoglu, 2021). Figure 1 has three job-seekers that are denoted as A, B and C and three job vacancies that are D, E and F. The job seekers can be migrants or natives. The letters between brackets indicate skills and characteristics that job seekers have and the skills and characteristics needed in the vacancies they seek. The dotted lines show potential matchings. The stable matching scenario is shown by thick lines: Job-seeker-A matches with Job-D, B with F, C with E.

In a perfect labour market, migrants would have well-identified skills, and vacancies would have well-identified skill requirements. Perfect information would assure that no hidden or implicit preferences dominate matching. The market would eventually settle down to an equilibrium where every job seeker migrant matches with a job appropriate to their skills. The primary aim of integration policies in this world is to facilitate matching, for instance, by helping the recognition of skills and mediating between migrants and jobs (Burnazoglu, 2020). This approach is in line with both the neoclassical and human capital approach to migration that values skills over other characteristics. It tends to ignore power relationships in societies that are embedded in economies.

This perfect world is, however, far from reality. Labour markets are imperfect, perhaps even more imperfect for migrants than for natives. Recent reports show persistence of wage gaps between migrants and natives (Grubanov-Boskovic et al., 2017; OECD, 2018A, 2018B, 2019). Though there is increase in migrants’ employment rates overall in OECD countries, they still display lower employment rates than natives. Specific migrant groups are reported to perform well; however, contrasting cases are present and persistent for some migrant groups. Migrants are concentrated in low-skilled occupations, despite their relatively high educational levels; they don’t always work in jobs appropriate to their skills; and they are more often over-qualified for jobs than natives (Grubanov-Boskovic et al., 2017; OECD, 2018A, 2018B, 2019).

The lower labour market performance of migrants is often explained by observed skill differences.⁴ Yet these reports also argue that there is much more left unexplained after controlling for skills, education and experience. OECD (2018A) reports that, for over-qualification, only one-fifth of the differences in rates is explained by skill differences. In a meeting organised by the European Commission on ‘Sustainable Inclusion of Migrants into Society and Labour Market’ in April 2019, it is argued that formal education does not guarantee migrants’ inclusion into the labour markets (European Commission, 2019). In addition to lacking language skills and difficulties with skills identification, migrants and particularly refugees, encounter cultural differences, discrimination and also legal obstacles and mental health problems as barriers to entering the labour market (European Commission, 2019, p. 5). On the other hand, the European Commission’s Joint Research Center reports that the substantial differences in integration outcomes according to regions of origin of immigrants persist through time even after controlling for education (Grubanov-Boskovic et al., 2017). This is mostly explained by trends attributed to origin countries such as the migration types that the country tends to produce. But they also mention, without further investigation, that there can be historical, cultural and socio-economic reasons that lead to different social network effects and possible discriminatory attitudes by employers against migrants from particular regions. Gary Becker’s (1971 [1957]) model explains all these discriminatory attitudes as a matter of employers' or customers' tastes and preferences against people from certain groups that would impose a cost and, therefore, likely to disappear in long run. But why and how do such prejudices exist and persist?

Factors that are not or cannot be included in the basis for matching remain unexplained by the theory and fall into a category called frictions. Petrongolo and Pissarides (2001) famously argued that search and matching theory offers an attractive way of examining markets with frictions. The usefulness of the theory is due to its empirical relevance for capturing actual matching events in the market and pointing out the influence of frictions on equilibrium that derive from information imperfections, heterogeneities and other similar factors. However, matching models capture the effects of frictions without fully explaining their sources and are, therefore, metaphorically called a black box (Petrongolo and Pissarides, 2001).

In this search and matching understanding, migrants’ integration through employment is a phenomenon with frictions. In contrast to the perfect labour market scenario depicted in Figure 1, mismatches such as the ones in Figure 2, where job seeker A does not match with jobs that correspond to some of their skills, occur in real markets, because their potential ties are cut for some reason. The black box of matching needs to be opened; that is to say, one needs to go further and see what the sources of frictions in integration are, especially when these frictions occur continuously and systematically.

European institutions try to open the black box by recognising dimensions of integration beyond skills that foster, what they call, ‘mainstreaming migrants’ through inclusive integration policies. In the recent European Commission meeting on the sustainable inclusion of migrants, Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labor Mobility, said, ‘For a cohesive society, we need those that do stay in the EU – refugees, migrants and their children – to participate fully in economic, cultural and social life. In an inclusive society, we cannot leave anyone behind. (…Inclusion measures should be seen as an investment rather than cost,) an investment that pays dividends for the economy and for society’ (European Commission, 2019, p. 4). This institutional view and understanding puts migrants’ broad participation under the spotlight and shows that migrants are more than just workers or migrants, as Western European host countries had failed to see when they received ‘guest workers’ in their post-war recovery processes.⁵ Migrants’ integration has now an investment narrative rather than only a cost one. Different from the human capital approach, which expects migrants to see integration as an investment, now the host countries see integration an investment by channeling public funds towards migrants’ inclusion.

Integration factors other than education and skills, such as inclusion, deserve investigation. Job seekers and vacancies do not match solely based on the skills that job-seekers have and those that vacancies seek.⁶ People’s social characteristics can determine the basis for matching in addition to those explicitly stated in vacancies. Such obstacles at different level and layers of socio-economic systems may remain present though they are hard to observe with available data and analyses. Therefore, it is not only human capital-based employment that is instrumental to integration; social access to being employed is also a means to integration. To elaborate on both the individual differences of migrants and access to employment, we need a structural approach to employment such as stratification theory offers; and, seen as requiring investment, a structural approach to employment as a good.

3. A structural approach to group-based inequalities in labour markets

The EU institutional approach partially recognises migrant characteristics beyond skills but does not seem to fully recognise that the matching problem goes beyond individuals and the reach of the investment concept. One cannot ignore the social barriers to labour markets which individual migrants face. One also needs to understand group-based exclusion and inequalities that come from individuals’ identification with social groups that operate beyond individual preferences, choices and actions.

Stratification economics is a subfield in economics that emphasises group-based inequalities (Darity, 2005; Davis, 2015; Obeng-Odoom, 2018, 2020A; Seguino, 2019; Burnazoglu et al., 2022A, 2022B). It can serve as the missing link in understanding migrants’ integration through employment, understood as a good. I first give a more complete definition for the type of stratification with which this paper works. Then I investigate specific exclusion mechanisms by revisiting the employment good within the goods typology.

3.1 Stratification: Social identity-based institutional structures

Social stratification occurs when societies organise and rank people in a hierarchical way, not as a reflection of individual differences but with respect to their social group membership and categories (Massey, 2007). I explain stratification in terms of social identity-based institutional structures, which allows me to examine a rich array of institutional mechanisms influencing people’s opportunities and actions.⁷

Institutions are systems of social rules embedded in society (see Hodgson, 2006). Rules can be formal and informal. Informal rules are dos and don’ts for individuals (Crawford and Ostrom, 2005), and ‘prescriptive requirements’ (Ostrom, 1986, 1990, p. 126). In brief, they are working rules (Commons, 1957; Ostrom 1986), ‘ruling-in’ some behaviours and ‘ruling-out’ others (Ostrom, 1990).

Migrants, as any individuals, categorise the world around themselves and identify with some social categories, defined as social group identities.⁸ Social identities operate like institutions that impose rules like prescriptions that must be satisfied to be a member of a group. Identification with a social group category such as an ethnic, gender, religious or an ideological one influences and generates reference points for migrants’ perceptions, behaviours and actions with respect to the shared normative understanding of the group (Darity et al., 2006). Therefore, migrants’ seemingly individual preferences are framed, though in different degrees, by the norms of groups with which they identify (Davis, 2005, 2011).

Migrants are members of social groups that they identify with (Kirman et al., 2007). This membership links them to a relative group position in a social hierarchy (Darity, 2005; Darity et al., 2014). We should note that the purposeful identification and membership that comes with it is just one side of the coin. The other side has a different story: independent of persons’ own identification with social groups, other persons can see them as members of certain groups and categories. For instance, migrants may purposefully identify with being a migrant and bind themselves by the rules that migrant groups have, such as not following some of the native customs. But even if they don’t, natives may still believe or assume they do. So, the identification does not have to be performed just by the person; even physical characteristics such as the skin colour may push the person to belong to a certain reference group such as a racial group and to have characteristics that come with that group.

Stratification economics proposes a fundamentally different understanding of market mechanisms from that of the mainstream economics. John Davis (2019) contrasts stratification economics with Gary Becker’s analysis of how discrimination in labour markets should ultimately disappear because it is incompatible with competitive labour market forces. This comparison shows fundamental differences between mainstream and stratification economics in terms of their individual conceptions, discourses, normative scopes, understanding of competition and treatment of conflict. Based on this contrast, I distinguish two fundamentally different views of migrants’ labour market integration in Table 1. Although there exists a wide literature in migration studies, sociology and social psychology emphasising social aspects of migration and integration, the recent EU policy on migrants’ integration relies on a mainstream economics understanding.

In the mainstream view, migrants are relatively atomistic individuals whose behaviours can be known and adjusted. The policy discourse for this individual conception tends to ignore migrants’ agency and calls for private, but mostly institutional investment by member states and the EU. Stratification economics, in contrast, does not analyse the individualistic migrant whose behaviour adjusts when there is enough investment. It avoids both ontological and methodological individualism and is critical of standard economics’ rationalising attitude (Obeng-Odoom, 2018). Rather than focusing on individual experiences, stratification economics analyses the roots of enduring exclusion and inequalities associated with relationships between social identities and institutions.

The mainstream view of integration assumes migrants compete with natives in host country labour markets, and any discrimination that they face is supposed to be addressed at individual level. Stratification economics, on the other hand, assumes that individual level solutions do not reflect the macro mechanisms which inform individual situations. Markets, and labour markets in particular, are stratified by, for instance, race and gender. Differences in labour market outcomes in part come from enduring stratification mechanisms (Darity, 2005; Hamilton et al., 2011), which then can perpetuate stratified structures in other markets or walks of life as well (Darity et al., 2014). Moreover, group conflicts are not spelled out openly but are often ignored in the mainstream view. Individual conflicts fall under the standard matching view’s frictions explanation and need no attention. Recent upheaval of racism discussions in the USA and some other parts of the world clearly demonstrate and remind the world of the actual ongoing and consistent conflict.

Stratification economics argues that social identities generate a basis for inequalities and conflicts. The recent Human Development Report (UNDP, 2019) shows that inequality tracks differences between social identities such as gender, race, ethnicity, religion, caste, class and sexual orientation. Presenting a wide array of evidence and recent data on social identity-based inequalities, the Report argues inequality ‘arbitrarily marks some social groups as superior to others in the opportunities they enjoy, the powers they command and the respect others owe them,’ and adds that ‘under such conditions members of subordinated groups lack effective means to vindicate their human rights, even in states that legally acknowledge these rights’ (UNDP, 2019, p. 89).⁹ The Report does not use the stratification concept explicitly but discusses the enduring and pattern-like characters of inequalities. Obeng-Odoom (2020A, 2020B) argues that UN organisations limit discussion of inequalities to the issues of measurement, data, development goals, and, as the 2019 economics Nobel Prize shows, experiments. Social stratification, that is, enduring mechanisms that operate systematically to reinforce social identity differences, reproduces similar outcomes to those of inequality that are analysed extensively in the Report. The difference is that stratification is a structural explanation that does not limit these inequalities to existing inequality measurements. Instead, it places the dynamics of social strata in society at the centre of the analysis. In a stratification understanding, the problem starts with how social stratification affects access and opportunities for people; thus, with power imbalances.

As a last point of comparison, the normative scope of the mainstream migration policy is limited to efficiency and investment in labour markets just as is mainstream economics. The European Commission’s inclusive integration narrative (2019) emphasises the necessity of migrants’ broad participation in society. However, it is still motivated by the efficiency in labour markets in the context of an aging society in Europe. It seems that the European policy aims to convince actors to invest in migrants’ integration based on the expectation that they will pay back this investment by providing the necessary labour force. The stratification understanding proposes a shift in motivation from efficiency to fairness, equal access and rights.

Given the contrast between stratification and mainstream views on migrants’ integration, I conclude that current integration policy employs a limited perspective. The stratification perspective, in contrast, has a fundamentally different position, discourse, normative scope as well as an emphasis on conflict. To understand how this modifies labour market matching for different groups, the role of conflict should remain on the table and exclusion be given a structural analysis. The standard goods typology in economics offers a structural analytical approach with which we can do this.

3.2 Exclusion as seen in terms of the goods typology

In line with the EU’s view of integration as an investment, migrants’ employment can be seen as an integration good. However, not all have equal access to it through labour market matching due to factors such as exclusion based on group identities. Societies organise labour markets into different destinations with sharply different sets of opportunities, and thus migrants into different integration paths (Burnazoglu, 2021). These destinations are taken by groups of migrants, not individual migrants only. As Obeng-Odoom (2022) argues, migration is not about individual choices alone but is shaped by variety of institutions. This does not include the reason for migration only but also post-migration processes. Rejecting the standard explanation that emphasises integration in terms of human capital, integration should be seen to result from the interactions of rules, settings, and individuals built around social group identities.

What kind of good, then, is employment when social identities generate the basis for institutional structures? The standard goods typology describes different types of goods in terms of excludability and rivalry. It originates in Samuelson’s (1954) twofold division between public and private goods on the southwest-northeast diagonal and was further developed using James Buchanan’s club goods (1965) and Elinor and Vincent Ostrom’s common pool goods (1977) on the northeast-southwest diagonal, as shown in Figure 3.

This typology accounts for exclusion endogenously and thus offers a broader explanation of sorting mechanisms that determine different types of employment goods for migrants and natives.¹⁰ These mechanisms can be understood in terms of institutional structures that create different employment opportunities and outcomes in a systematic fashion. To explain how different people get different types of jobs, I follow Davis (2019) to focus on the distinction between the common pool goods and club goods.¹¹ Davis characterises clubs as a set of exclusionary practices and institutions that systematically discriminates against certain groups of people. These practices occur in the form of discrimination in employment, housing, education, health facilities etc., against some ethnicities, among other characteristics. Club-like institutions, in which the privileged enjoy membership, segregate other people into common pool type pathways. Common pool type locations are, then, places to which neoclassical theory’s scarcity principle especially applies, and where people face economic vulnerability, uncertain income and limited ability to accumulate wealth (Davis, 2019).

Each migrant is supposed to have the same opportunity as a native to become employed. If this is true, and if migrants share employment opportunities with natives, employment can be understood as common pool resources type of good, that is, a good that is rival but non-excludable. The common pool resource destination is representative of employment opportunities for migrants in general and for some natives.

When employment opportunities are limited for migrants, to the extent that there is some degree of exclusion and this exclusion, though implicit, concerns mostly certain groups of people, employment acts like a club good for some, namely natives. Those who can exit common pool circumstances effectively do so by satisfying some integration criteria for club-like employment situations, as reflected in a move from the common pool area in right bottom of the typology towards to club area in the upper left as seen in Figure 4. Mügge and van der Haar (2016) argue that European Nation states and institutions act as clubs by defining immigrants to regulate who can enter their territories and under what conditions. Kolb (2008) sees states as acting as clubs in their selection of certain types of migrants. Schmidtke (2012) suggests excludability is a result of a ‘utilitarian logic’ in countries with regard to country-wise economic competition. These approaches focus on host countries as clubs mostly in the pre-migration process and during the selection of migration profiles in policy making. However, post-migration processes and employment also give examples of club-like exclusionary mechanisms.

What are these exclusionary mechanisms? Exclusion can be in different forms and degrees. It is often caused by natives and other times self-imposed and perceived by immigrants. Its influence can be hidden in and underlie other factors. While standard search and matching frictions measure skills with current decomposition methods, migrants’ implicit, unexpressed or hidden characteristics can influence interpretation of skills significantly.

For instance, job vacancies express what they specifically look for but do not express what they do not look for or do not prefer. Let us assume that c is the characteristic being a migrant. Then the one that has c, job-seeker-A, is a migrant and B and C are job-seeker natives. Vacancies can be exclusionary if they have an implicit list that includes binary expressions such as ¬c (non-c), which, in this simple example, means non-migrant. As shown in Figure 5, this creates another parallel set of vacancies, with different lists that make them exclusionary. In the case in which c indicates the characteristic of being a migrant, and ¬c is in vacancies’ implicit lists, jobs actually exclude the job-seeker with c, who is a migrant.

One of the main findings of a recent report by the European Commission’s Joint Research Center shows substantial differences in integration outcomes across origin countries of immigrants even after controlling for education (Grubanov-Boskovic et al., 2017). While immigrants from North America and Australia in Europe have higher rates of employment than natives, those from North Africa and the Middle East have the lower employment rates. This is often explained by the characteristics of the origin countries such as the migration types that a country produces, connected with human capital differences such as highly skilled migrants, labour migrants and migrants through family reunification or refugees. Family reunification and seeking refuge is more common to migrants from North Africa and the Middle East while North American and Australian migrants are mostly highly skilled. This view is in line with the statistical discrimination account (Arrow, 1971, 1973) that explains frictions in matching to result from the recruiter’s reliance on guesses about a job-seeker by using their identities as proxies for unobserved skills. It is different from Becker’s (1971 [1957]) taste-based discrimination in that statistical discrimination is not based on the taste of the recruiter but the information they have. However, both accounts imply an individualistic and accidental type of discrimination that would eventually disappear in the market; therefore, they both fail to explain the persistence of group-based exclusion. As stratification literature shows, the exclusion can have a structural and functional role in preserving hierarchy of social groups based on identities (Darity and Mason, 1998; Bertrand and Mullainathan, 2004).

Many other studies show connections between the characteristics of origin countries and integration outcomes. Based on a field research survey in Istanbul, Bagce and Yilmaz (2020) show that ethnic background serves as a more dominant explanation for integration than human capital endowments. In their study that uses an ‘ethnosizer’ measure, Georgians, although the third closest ethnicity to Turkish society, suffer the largest wage gap and are exposed to the highest discrimination in the labour market together with Afghan and Pakistani refugees. Arabs, on the other hand, are labelled as separated, but have the lowest wage gap and, surprisingly, declare not to be exposed to discrimination at all.

Matching based on implicit characteristics, then, suggests that migrants from certain origin countries are filtered out of certain types of employment when employment opportunities are seen to be like club goods with implicit exclusionary mechanisms. Migrants, located in common pool type employment situations by default are in a disadvantaged position in comparison to natives and perhaps with migrants from other origin countries. One should remember that exclusion can occur along different identity lines and through different mechanisms in different contexts. When different group identities and contexts come into play, the mechanisms and outcomes differ. Our example is about migrants’ origin countries; however, other dynamics with respect to race, ethnicity, and gender occur as well and determine the mechanism and thus the outcome.¹² For instance, a wealthy white man from the Global North would not face exclusion in a native labour market in the Global South as much as a Global South black woman would in the native labour market in the Global North. This article employs a simple distinction about migrants and natives at the expense of such complexities to be able to identify general mechanisms for migrants, which can then be considered for the interaction of different identities in different contexts.

Exclusion is not necessarily purposeful; it can also be unintended. As an example of unintended exclusion, many migrants, particularly refugees, do not bring their diplomas and documents with them; therefore, they cannot document their skills to the potential recruiters. Employers may also be uncertain about migrants’ skills obtained elsewhere (OECD, 2018B). Migrants’ skills are also not fully transferable into the European standards (Burnazoglu, 2020). In this case, migrants’ integration goods, that is the employment opportunities as defined in this paper, are limited. They accordingly tend to be discounted due to their misidentification and mismatch with wrong jobs.

European institutions have set up programs and tools that can be helpful for the identification of skills and coordination of job-seekers and jobs, such as the EU Skills Profile Tool of the European Union that was launched in 2017. By ‘making skills more visible and comparable,’ (European Commission, 2016, p. 3) these tools aim to facilitate migrants’ access to employment. Burnazoglu (2020) argues that policy tools such as the EU Skills Profile Tool may help identification by mediating between refugees and their workable profiles. This mediation involves turning unidentifiable refugee characteristics into identifiable ones which can be used in labour markets. However, the ways in which this Tool is designed acquire a normative character since the profiles that are the outcomes of the Tool are of a certain type that sorts migrants towards certain labour market destinations. Sorting migrants in order to solve the identification problem should then be understood as a form of exclusion that is not necessarily purposeful but can, nevertheless, lead to exclusion. A similar mechanism occurs in the use of algorithms in, for instance, job matching. Even if the design of a matching algorithm does not have an explicit purpose of excluding certain profiles, embedded judgements, and use of proxies in its design can nevertheless lead to sorting individuals into relatively advantaged or disadvantaged places; a mechanism which we can call Algorithmic Stratification (Burnazoglu, 2022).

Such seemingly unintended sorting places migrants in common pool type locations because common pools are where anyone with a migrant identity falls by default. The case of migrants fits Davis’ characterisation of common pool type locations as places where people face economic vulnerability, uncertain income and limited ability to accumulate wealth. As listed among ‘Relative Uncertainties for Migration by 2030,’ migrants in common pool type locations face social uncertainties such as ‘public response to growing cultural and ethnic diversity’ and ‘inequality within and across member states (class, gender, ethnic, residence status); political uncertainties such as ‘levels of xenophobia, islamophobia and racism,’ and economic ones like ‘structure of labor demand’ (European Union, 2018, p. 20).

The institutional barriers that migrants face when trying to join a club setting are established by social rules similar to norms and prescriptions of groups that coordinate human behaviour and lead it into recognisable behavioural patterns. These elements have different degrees of force which would explain why behavioural patterns emerge, persist, and evolve, and also how easy or difficult it is for migrants to adapt to the groups they wish to join. When migrants try to enter a labour market organised in a club-like way, they become subject to institutional forces that define the terms of entry (Burnazoglu, 2021). Integration processes move migrants into established social systems which accept migrants’ agency in a very limited way (Burnazoglu, 2021). Migrants’ integration into established social systems, in our case, into labour markets, are thus surrounded with social rules and mechanisms that cannot be easily satisfied and handled by migrants.

4. Stratification traps

The previous section argued that enduring disparities in migrants’ labour market performance result in part from exclusion mechanisms for the employment good in social identity-based institutional structures. Stratification functions like a trap for migrants; it reinforces itself by reproducing exclusion and causes dilemmas for migrants about integration. I suggested that mainstream’s skills-based labour market matching and integration as an investment further deepens this trap. How does the stratification trap function?

4.1 Labour market commons as institutions for collective action

Arguably the best known trap-type analysis is introduced by Garret Hardin (1968) as the tragedy of the commons to explain over-exploitation of common pool resources. Hardin is also known for a tragedy of migration type approach.¹² However, in his classical tragedy of the commons, the problem concerns governing natural resources; people need resources to maintain their livelihoods, but because nothing limits access to those resources, they are over-exploited. In the migrants’ case, this tragedy about over-exploitation is similar to being caught in a social stratification trap that ensures migrants will fail to close the gap between their labour market outcomes and those of natives.

Akbulut (2017) argues that the solution for Hardin lies in centralisation or privatisation; however, the works of others such as Ostrom (1990, 1994, 1999, 2005); Berkes et al. (1989); Berks (2009); Agrawal (2003); and Wade (1987) involve solutions without choosing between the two. Among them, Elinor Ostrom proposed a fundamentally different view of common pool resources than Hardin’s tragedy. Instead of sticking to unalterable tragedy scenarios, Ostrom analysed the dynamics of governance for common pool resources and institutions for collective action. Similarly, instead of seeing labour market mechanisms as unalterably leading to stratification and the remedy in the over-optimistic investment view, I suggest we see them as a collective action problem.

Ostrom argues that Hardin’s tragedy and seeing natural settings as tragedies of commons make people ‘helpless individuals caught in an inexorable process of destroying their own resources’ (1990, p. 8), “(…) in a trap from which they cannot escape (1990, p. 14). Ostrom rejected this idea of helpless individuals, and her rich insights into the human capabilities call for changing institutions. She emphasised in her Nobel Prize lecture: ‘The humans we study have complex motivational structures and establish diverse private-for-profit, governmental, and community institutional arrangements that operate at multiple scales to generate productive and innovative as well as destructive and perverse outcomes (North 1990, 2005)’ (Ostrom, 2010, p. 641).

Farjam et al. (2020) define commons as governance regimes set up to coordinate the exploitation of resources by different users. The concept often implies a social dilemma and conflict between individual self-interest and collective interest outcomes (Ostrom, 1998). Institutions understood as systems of rules can overcome the tragedy of commons and lead to collectively beneficial outcomes (North, 1990; Ostrom, 1990, 2005; Farjam et al., 2020). Ostrom argued that ‘the capacity of individuals to extricate themselves from various types of dilemma situations varies from situation to situation’ (Ostrom, 1990, p. 14). In some situations, individuals may have sufficient autonomy to craft their own institutions (Ostrom, 1990, p. 60).

There are many diverse situations and mechanisms behind migrants’ integration in the labour market, which interestingly have not been connected to institutional explanations for collective action problems. However, migrants can make use of their social group identities to collectively organise their access to labour market opportunities. In the common pool type situations that Ostrom emphasises, in contrast to the cases where Hardin’s tragedy applies, individuals possess social capital, which as part of their social group identity helps them organise communication (Ostrom, 1990, p. 184). Social norms, for example, can determine the success or failure of common pool resource management. In the case of migrants’ integration, people’s social identities connect with social group norms, provide possibilities for migrants’ survival solutions in the presence of excludable goods, and, therefore, make a significant contribution to our understanding individuals’ capacities with regard to their social group identities. We can then rephrase the question of whether migrants can escape the migrant trap as: Can migrants overcome social stratification by organising themselves to compensate for exclusion-led failures by changing institutions?

4.2 Institutional change from common pool situations to clubs and the persistence of ‘sticky’ clubs

With exclusion from native employment clubs, migrants can organise themselves and create their own employment clubs by making use of their social identities. When they cannot get through the filters of a native situation (see club-1 in Figure 6), they may form or move to alternative migrant club situation- club-2 in Figure 6 – to lower their employment search costs and reduce transaction costs, improve their bargaining position, and share the risks that they face in labour markets. These alternative club situations also create a certain level of exclusion to outsiders and can be durable and long-lasting.¹³ They can be migrants’ survival solution to compensate for their disadvantageous positions. These alternative clubs function similarly to the native club. The norms of these clubs improve migrants’ opportunities for better lives as they understand it.

The alternative club solution would be an example of a change in institutional location as the rules of the game are different according to the norms of the club they enter. Social identities are the basis of moves from common pool situations to these alternative survival clubs. This involves a change in institutional location affecting how migrants behave, make decisions and interact with other migrants and natives. By moving from the common pool situation to these alternative clubs, migrants change their opportunities by entering a less competitive situation, at least, in short term in the form of a social capital membership/endowment. Migrants often benefit from being members of these alternative clubs. With these new endowments, they may refrain from leaving a club that they matched and trying to enter a new one. We can call this stickiness of clubs that indicates their institutional persistence.

The social dilemma, however, not only exists for common pool resources when they are highly rival and non-excludable as the typology suggests. Club-like cooperation can be problematic in the long run in both clubs and at whole-society levels. At the club level, cooperation can be problematic due to the downsides of club dynamics and outcomes. Portes (1998) describes four possible negative implications of social capital: groups with strong ties tend to exclude outsiders; excessive claims and pressing social obligations may undermine individual initiatives; membership may restrict individual freedom; downward levelling norms, rather than communal success stories, push individuals away. Referring to Portes’ implications, de Haas (2010) emphasises a need for more nuanced view of the positive but also negative sides of migrants’ social capital. The use of social capital, in our case the capital that comes from social identities, can be useful for some reasons. However, it can also be among the factors that impede migrants’ integration and eventually lead to the breakdown of migration systems (de Haas, 2010) due to the stickiness of clubs.

There is a broad social capital literature that goes hand in hand with these up and down sides of social group dynamics. Giving an excellent account of some of these theories and applications, Andriani and Christoforou (2016) refer to the distinction between three types of social capital: bonding social capital that refers to ties within groups, bridging social capital that refers to links across groups, and linking social capital that brings social groups together at the levels of policy and/or power position (Woolcock and Narayan, 2000). They endorse the literature about bonding social capital that can help group members bond and deal with socio-economic problems. In this paper, the concept of bonding social capital is parallel to migrants’ alternative club forming. However, as Andriani and Christoforou argue, when these groups are exclusive and closed, members can get trapped in disadvantaged positions due to power imbalance with other groups. This is in line with the sticky clubs idea that is considered to perpetuate power imbalances between migrant and native groups. They suggest that bonding social capital may help group members ‘get by’ but make it less likely for them to ‘get ahead.’

When migrants’ survival needs turn them to alternative clubs, the dilemma remains at the society level too. Society now contains parallel and segregated migrant and native clubs, solidifying stratification in the society even further. Certain people go to certain places for survival reasons; when those places are sticky and persist, more people may go to those places for the same survival reasons. These new clubs may lead to new power relationships within groups and contribute further to the reproduction of a stratified society. Therefore, migrants’ social dilemma expands on the societal level.

5. Escaping the trap?

The main focus of this paper has been how social stratification acts as a trap for migrants. I criticised the standard search and matching theory that emphasises labour market frictions but does not explain the mechanisms behind them. I described the perils of the investment narrative to migrants’ integration which emphasises integration as a good without addressing the exclusion mechanisms that undermine it.

I then suggested we approach migrant integration from a fundamentally different perspective: stratification as social identity-based institutional structures that drive and therefore explain the labour market mechanism for the diversity of agents and situations they face. What determines behaviours and outcomes in post-migration processes, then, depends on dynamics that cannot be reduced to a simple approach that concerns only pecuniary, stable, isolated, intended and purely individual motivations. The goods typology is an extremely useful analytical tool for endogenising exclusion and, therefore, for focusing on long overlooked power dynamics in seemingly neutral and ‘just-frictional’ labour markets. This approach explains integration dynamics within countries and why migrants do not always match the seemingly available opportunities even when their relocating was expected to provide them with such opportunities. Emphasising power relationships, it brings conflict into our analyses as a principle rather than as a friction.

I suggested we employ a trap-like analysis where people face inalterable social dilemmas governing their resources. I discussed Elinor Ostrom’s groundbreaking turn in thinking about the commons in treating them as institutions for collective action in which people are not passive agents but can organise themselves to govern their commons both for individual and collective benefits. Having made employment a common pool good and therefore explained institutions in terms of collective action in labour markets, I argued that a migrants’ survival solution in the form of creating alternative clubs does not solve the problem at the whole society level. The stratification trap reproduces migrants’ position often subject to unequal and unjust outcomes in society, which goes beyond Ostrom’s reach.

What is missed in Ostrom’s explanations is an emphasis on the varieties of conflicts that arise from structural power relationships. Bengi Akbulut (2017) argues that Ostrom’s approach is ground-breaking regarding the governance of common pool resources, however, in a way that has much in common with Hardin’s approach as it employs methodological individualism that implies individuals’ strategic interactions are a response to economic and social incentives to find a solution. This is in line with the mainstream tendency to mistreat social capital as an individualistic concept. However, as Asimina Christoforou (2013) argues, when the ‘social’ in social capital is understood as social embeddedness, it can and should address political aspects of human agency. Akbulut continues suggesting that Ostrom’s approach operates in a ‘sterilized fashion’ that does not capture broader historical processes of capital accumulation and power relations (2017, p. 395). She argues that Ostrom’s approach cannot address intensifying dimensions of inequalities and the dynamics that shape them, which the Marxian political economy and especially feminist ecological economists such as Agarwal (2001) can. On the other hand, Ben Fine (2010, p. 584) criticises Ostrom saying ‘her analysis, like that of mainstream economics, is silent about class, power, and a specification of capitalism and its history. Conflict barely makes its way onto her agenda, which prefers neutral references to universals—such as boundaries, congruence, sanctions, rights to organise and so on—with which mainstream economics is more than comfortable, if slightly unfamiliar.’

Stratification economics can fill the gap by providing a crucial link connecting the types of goods, inter and intra group dynamics, and a structural identity-based explanation for reinforcing power imbalances. It endorses the need to rethink not only the commons but the thin link between commons and club goods that highlights the question of structural exclusion mechanisms. It reminds us that social group clubs rely on the accumulation of different types of capital that create persisting social, economic and political trap-like structures. Bourdieu (1986) explains how these structures can be reproduced in variety of ways through different institutions in society. He stresses that the dominant groups reproduce these structures thanks to their possession of richer endowments and capital. Stratification economics adds to this an emphasis on identity and excellent range of evidence showing how dominant social groups particularly along the lines of race, gender, and their intersections maintain the hierarchy of groups. The type of collective action suggested in this paper then endorses structural solutions to structural power asymmetries, diverging from that of Ostrom’s individualistic actions and group actions reduced to individualistic motivations.

How then can not only migrants but society escape the stratification trap? Put differently, how and with which institutional settings and arrangements can migrants and natives organise and govern labour markets for the benefit of society in a way in which integration is not only beneficial but also results in more equal and just opportunities?

The key step, I believe, is that labour market matching be freed from stratification’s systematic sorting by social identities. For this, matching needs to unpack its skills emphasis and focus on changing forms of exclusion and power relationships. Economics’ obsession with data, prediction, and therefore measurability goes hand in hand with its inability to frame and handle structural inequalities and injustices. Single measure quantification becomes ‘an albatross around the neck of social reality’ (Obeng-Odoom, 2020B, p. 6) with the faith in prediction becoming the new economic religion (Cobb, 2019; Nelson, 2019). The same applies to the decomposition methods that save discrimination from the matching approach’s frictions to an extent. Nevertheless, the non-measured isn’t nonexistent; it does not disappear from the social reality. And, the method is political; ignorance of ‘non-measurables’ can no longer be legitimised.¹⁴

In capability terms, migrants should catch up with basic capabilities such as having equal access to health and education but also acquire enhanced ones such as having access to high positions in jobs, while also having the right to not need to be constantly improving themselves as natives have. Improvement should not be a duty on the shoulders of migrants to show that they deserve to be in a host country. What is needed instead is empowerment for people to have choices, not only migrants but also natives, particularly those who cannot join clubs of any kind but remain in common pool type settings for reasons other than race and ethnicity.

To emphasise the balance between the two types of social capitals, bonding and binding, Andriani and Christoforou (2016, p. 12) refer to the work of Woolcock and Narayan (2000) about the role of social capital in poverty transition mechanisms. The final mechanism they refer to is particularly relevant for this paper: ‘In order to escape from this bonding trap, members try to build a more diversified network, creating ties with members belonging to other groups. This increases the level of bridging social capital and thus raises economic opportunities.’ This balance is crucial to determining the type of group dynamics and outcomes that can result in either entrapment or empowerment.

How and who should empower people are difficult questions. European integration policies suggest both the state and the market matter for empowerment. Contrasting central regulation and market solutions about how to best govern common pool resources, Ostrom proposed a third way ‘neither the state, nor the market,’ and illustrated diverse collective action solutions beyond the classical dichotomy of states and markets (1990, p. 1). I suggest that both state and market actions should share the primary aim of not taking migrants and natives’ agency out of the picture. The simplest suggestion would be a negative action: not impoverishing and dehumanising people by thinking of migrants in binaries of being very vulnerable or very dangerous bodies, rather than their real and changing capabilities (Einashe and Rouche, 2019). Also, extra attention needs to be paid to the metaphors used in media, labour markets, and policy. Migration policy and also public images heavily rely on metaphors or beliefs about migrants (Burnazoglu, 2020). However, some of these, such as the investment narrative that creates expectations, may also dehumanise migrants who are continually obliged to prove their use to host societies. When this view of the world is used as the foundation for policy advice or private action, the outcome can be unhelpful or, even if unintendedly, harmful.

Dialogue between different actors, on various levels, and in various domains should remain on the table. Both the state and the market need to support migrants and natives’ empowerment to create and develop institutions. Many countries, such as the Netherlands, have cut their support for the civil society for what they call ‘mainstreaming integration’,¹⁵ but third parties such as civil society may still have an immense, if not the biggest, role for empowerment in local contexts.¹⁶

Migration is the new normal of our world (Obeng-Odoom, 2022). Migrants’ moves and reactions to them by natives will continue and have an increasing importance in mixed societies. Being aware of the complexity, multiple levels and dimensions in labour markets that are embedded in society and where people interact with each other beyond skills, we need a constantly on-going conversation to make sure ‘(…) today’s inclusion will not be tomorrow’s exclusion’ (European Commission, 2019, p. 23). This requires continuous courage and efforts to track systematic persistence of exclusion and find ways to break social identity-based stratification, even if this may benefit some groups or countries in the short term.

Acknowledgements

An earlier version of the work was presented at the 14th Workshop on Social Economy for Young Economists in June 2017, Bologna; in a special session on social stratification at the Annual Conference of the European Association for Evolutionary Political Economy on 12–15 September 2019, in Warsaw; and in the Association for Social Economics session on Stratification and Intergroup Inequality at the ASSA 2021 Meetings. I would like to thank the participants of all these meetings for their attempts to think with me and for their fruitful comments. I am particularly grateful to John B. Davis whose comments and criticisms greatly helped to improve the paper. I am thankful to the reviewers, Marcel Boumans, Franklin Obeng-Odoom, Noé M. Wiener, Sinem Bagce, Robert McMaster, Lynne Chester, Wolfram Elsner, Caglar Dede, Yves Le Grand, and Adam Smith Fellows for their generous feedback. Any remaining error is my own.

Conflict of interest statement. None declared.

Bibliography

Footnotes