A Finnish integration reform for adults boosted their children’s grades and earnings decades later

It appears that parents’ exposure to host-country labour markets can help their children make more informed educational choices, says Hanna Pesola, research director at the VATT Institute for Economic Research.

As a speaker at the conference “How is the second generation doing? Promoting integration of migrants and their families in the Nordic countries,” organised by Nordic Welfare Centre together with the Nordic Council of Ministers and the Ministry of Economic Affairs and Employment in Finland, as a part of the 2025 Finnish presidency of the Nordic Council of Ministers in Helsinki November 2025, Pesola presented new findings on the long-term effects of Finland’s 1999 Act on the Integration of Immigrants and Reception of Asylum Seekers.

In short, the reform made integration plans compulsory for immigrants who arrived in Finland after 1 May 1997 and who were registered as unemployed or receiving welfare benefits. The plans included personalised training, subsidised work and other active labour market programmes.

The integration plan thus became mandatory for recently arrived immigrants who were unemployed or receiving welfare benefits on a non-temporary basis. Previous research has shown that, for the immigrants themselves, the 1999 Act had many positive effects.

– It had a significant effect on immigrants’ earnings; they increased by 47 per cent. At the same time, it did not affect the amount of training they received; only the content differed.

Parents’ labour market success influences their children’s educational outcomes

Hanna Pesola and Matti Sarvimäki’s recent research at the VATT Institute examined children of immigrants affected by the reform, focusing on their grade point average (GPA) at age 16, when completing basic education, and their earnings at age 31. The study followed children who migrated with their parents and who were, on average, 11 years old when they arrived in Finland.

– We know that children of immigrants often struggle in school. There are significant gaps between children of immigrants and native born children in completing secondary education. There are many explanations for this, such as discrimination, preferences, beliefs and socioeconomic background, Pesola says.

The results of the research showed that parents’ exposure to the 1999 reform positively affected their children.

– The 9th-grade grade point average of the children of these immigrants rose sharply after the plan became mandatory, Hanna Pesola explains.

The children also went on to attain degrees associated with higher predicted earnings.

– They enrolled in and completed degrees with higher average earnings, and their actual annual earnings at age 31 were higher compared with the children of immigrants who arrived before the mandatory integration plan.

Examining the heterogeneity of the results, Pesola notes that most of the GPA improvement was driven by girls, indicating that the reform had a greater effect on them. Differences by parents’ country of origin were minor and showed no substantial variation.

It can take decades for the full effects of an immigration policy to emerge

So far, the researchers cannot say exactly which mechanisms drive these positive outcomes. Still, it is reasonable to assume that parents’ exposure to host-country labour markets can help children make more informed educational choices.

– If parents have more exposure to native workers in their workplace, it can be an avenue for this, in addition to the information they receive in the integration programmes, Hanna Pesola explains.

She also emphasises that the long-term effects of immigration interventions need to be taken into account when designing future reforms.

The main takeaway is that an integration reform targeting adult immigrants had a very positive impact on their children. We should remember that the benefits of such a reform can take a very long time to materialise, and this should be considered when governments evaluate cost-benefit analyses of these programmes.

Hanna Pesola and her research colleagues have only begun to scratch the surface of this field, and similar research is also underway in other Nordic countries. In Denmark in particular, studies have found strong effects of integration policies on the children of those targeted by the reforms.

– In some cases, researchers have found that the positive effects are just as strong for the children as for the adults who were the original targets of the reforms, and in some cases even stronger.

Text: Sebastian Dahlström

Foto: Frida Lönnroos