Immigrants in Denmark – improving integration to sustain the welfare state

Denmark is facing the challenge of an ageing population and the consequences of increasing immigration. The Danish universal welfare state, which includes a rather compressed wage structure and high welfare benefits, requires a broad tax base and a relatively low dependency ratio to be sustainable. However, the immigrant population is relatively low-skilled as a result of the migration policies in place and the fact that immigrants are attracted more by existing networks than by welfare magnet effects. Immigrants therefore tend to be difficult to integrate in the labour market, making them more welfare-dependent than natives. Denmark’s policy focus is consequently on raising the labour market participation of immigrants in order to help meet Denmark’s long-term fiscal challenges.