Who cleans my house if the government pays? Refugees, low-educated workers, and long-term unemployed in tax-subsidized domestic service firms

Rickne, Johanna

Who cleans my house if the government pays? Refugees, low-educated workers, and long-term unemployed in tax-subsidized domestic service firms

IZA Journal of Labor Policy

Volume 11 (2021): Issue 1 (January 2021)

By:

Johanna Rickne

Open Access

|May 2021

Figures & Tables

Expert judgments for skills needed among maids and housekeeping cleaners (black squares) relative to all jobs (box plots).Notes: The figure compares the skill requirements for maids and household cleaners (marked as black squares) to the distribution of skill requirements for other jobs in data from the O*NET database. The gray boxes represent 50% of the values of each variable, from the first to the third quartiles, and the horizontal line in the box shows the median. The whiskers mark the mini and maxi of the variable, and outliers are marked with black dots.

Distribution of educational requirements for maids and housekeeping cleaners compared to all other jobs in the U.S. labor market.Note: The figure shows the distribution of educational requirements as reported in the O*NET database (www.onet.com).

Total annual tax-deductions, number of consumers, and number of subsidized firms.Notes: The figure shows time trends in the total tax-deductions (left), the number of consumers with non-zero deductions (center) and the number of firms in three categories of specialization (as defined in Section 4).

Employment numbers.Notes: The figure shows annual counts of people whose annual labor earnings from a specific sector surpass three thresholds for total yearly labor earnings. Subsidized and highly subsidized firms are defined in Section 4. All income data are from Swedish tax records and cover all sources of annual earnings above 11 USD.

Shares of refugees, EU immigrants and non-EU immigrants across sectors.Notes: The figure shows the shares of people with different immigration backgrounds among people whose annual income from the sector exceeds 6 monthly wages for an average cleaner.

Share of employed with low education.Notes: The figure shows the shares of people with a low level of education among those with an annual income from the sector that exceeds 6 monthly wages for an average cleaner.

Figure 7

Profile of previous labor market statuses of sector entrants.Notes: The figure shows the labor market and immigration statuses of entrants into sectors in 2011–2015. Non-employment and unemployment are measured in the year prior to entry. Long-term unemployment is defined as unemployment in the year prior to entry, and either unemployment or non-employment before that. Recent immigration is defined as immigration in the two years before entry. The definition of recent immigration, i.e. within the last two years, over-rides the labor market status.

Ratios of employment shares to population shares for immigrant groups.Notes: The figure shows time trends in the ratio between the employment share and population share of immigrant groups. Population shares are for the full Swedish population of permanent residents aged 18–65.

Percentage change in the hourly price of domestic cleaning services compared to the same month in the previous calendar year.Source: The Swedish Central Bank.

Figure W2

Demographic Profile of Consumers of Subsidized Services Compared to the Population.Notes: The figure is based on a complete record of all consumers of tax subsidized services from the Swedish tax agency in 2010–2015. Population data comes from the administrative records of Statistics Sweden and are linked to consumers via the mandatory personal ID code.

Figure W3

Demographic Profile of Consumers of Subsidized Services Compared to the Population, and for Low- and High-Intensity Consumers.Notes: See notes to Figure W2. The proportion of the deduction amount is computed by summarizing the total deductions for consumers in a specific category and dividing that amount with the total dedications made in 2015.

Number of wage earners.Notes: The figure shows annual counts of people in three categories of wage earnings (see legend). The definition of subsidized and highly subsidized firms is presented in Section 4. All income data is from Tax Records and cover all sources of annual earnings above 11 USD.

Number of small business owners.Notes: The figure shows annual counts of people in three categories of total annual earnings of business income (see legend). The definition of subsidized and highly subsidized firms is presented in Section 4. All income data is from Tax Records and cover all sources of annual earnings above 11 USD.

Composition of immigrants in 2015, and among wage earners and small businessowners.Notes: See notes for Figure 5.

Composition of immigrants across sectors at two alternative income thresholds for employment.Notes: See notes for Figure 5.

Share with low education for two alternative income thresholds for employment.Notes: See notes for Figure 6.

Share with low education in 2015.Notes: See notes for Figure 6.

Figure W10

Profile of previous labor market statuses of sector entrants, lower income threshold for defining sector entrants.Notes: See notes to Figure 7. A sector entrant is defined as having zero income from the sector in the previous year and at least 1 monthly wage for a median cleaning job in the current year. Labor market statuses are observed the year prior to entry.

Figure W11

Profile of previous labor market statuses of sector entrants by sex at birth.Notes: See notes for Figure 7.

Distributions of years since immigration at the entry year into the subsidized sector, with entry defined as going from 0 to 6 months of wage income.Notes: Data for 2010–2015.

Distributions of years since immigration at the entry year into the subsidized sector, with entry defined as going from 0 to 1 months of wage income.Notes: Data for 2010–2015.

Shares of EU immigrants, people with low education, and refugee immigrants in subsidized domestic service firms, divided by firm size.Notes: Firm size is calculated as the sum of people who have a firm as their main source of labor earnings in a calendar year. This variable is missing for 2% of the main dataset. A cutoff for large firms is set at 100 employees. 10.3% of the workers in the main sample work in firms above this size-threshold.

Distribution of 1-digit occupations across sectors (%)

		Subsidized firms	Highly subsidized firms	Commercial cleaning	Restaurant sector	Private sector
0	Armed Forces occupations	0.06	0.06	0	0.06	0.02
1	Managers, senior officials, legislators	3.63	3.23	2.79	7.01	7.62
2	Professionals	1.48	1.47	1.16	0.95	15.45
3	Technicians and associate professionals	1.4	1.06	1.16	2.56	16.11
4	Clerks	2.66	2.27	2.34	1.91	8.99
5	Service and sales workers	7.96	7.53	8.03	37.72	16.86
6	Skilled agricultural, fishery, forestry workers	3.94	1.92	0.23	0.14	3.27
7	Craft and related trades workers	2.59	1.62	1.1	0.74	15.2
8	Plant and machine operators and assemblers	0.81	0.49	1.09	0.54	10.98
9	Elementary occupations	75.49	80.36	82.1	48.36	5.49

Assumptions about the sub-components in the price of domestic services_

	Percentage	Amount per 100 SEK of the price charged to the consumer, where of the tax-deduction is 50 SEK
Price charged to the consumer		100
where of Value Added Tax	20%	20
Remaining amount of net sales		80
whereof profit	10%	8
whereof non-labor costs	10%	8
Remaining amount of labor costs		64
where of social contributions	30% + 5%	16.6
Remaining wage amount		47.4
Tax-deduction relative to the wage bill		50 kr/47.4 kr = 1–05
Tax-deduction relative to net sales		50 kr/80 kr = 0.625

Composition of employees by the manager's country of origin for subsidized firms

Employees	Owner/Manager (% of firm-year observations)

	EU immigrants (32%)	Eastern European immigrants (23%)	Refugees (5%)	Non-EU immigrants (8%)	Swedish born (55%)
EU immigrants	0.77	0.91	0.34	0.10	0.23
Eastern European immigrants	0.68	0.88	0.16	0.06	0.16
Refugees	0.03	0.02	0.24	0.13	0.05
Non-EU immigrants	0.06	0.02	0.29	0.57	0.10
Swedish born	0.14	0.04	0.15	0.20	0.62
Low-educated	0.14	0.11	0.22	0.25	0.22