From engineer to taxi driver? Language proficiency and the occupational skills of immigrants

We examine the ability of immigrants to transfer the occupational human capital they acquired prior to immigration. We first augment a model of occupational choice to study the implications of language proficiency on the cross‐border transferability of occupational human capital. We then explore the empirical predictions using information about the skill requirements from O^*NET and a unique dataset that includes both the last source country occupation and the first four years of occupations in Canada. We supplement the analysis using Census estimates for the same cohort with source country occupational skill requirements predicted using detailed human capital related information such as field of study. We find that male immigrants to Canada were employed in source country occupations that typically require high levels of cognitive skills, but rely less intently on manual skills. Following immigration, they find initial employment in occupations that require the opposite. Consistent with the hypothesized asymmetric role of language in the transferability of previously acquired cognitive and manual skills, these discrepancies are larger among immigrants with limited language fluency.     

Immigrant earnings growth: selection bias or real progress?

We use longitudinal tax data linked to immigrant landing records to study the effect of selective attrition on the estimated earnings assimilation of immigrants to Canada. Contrary to findings in the existing international literature, we show that the immigrant‐native earnings gap closes at the same pace in longitudinal and cross‐sectional data. Low‐earning immigrants are likely to leave the cross‐sectional samples over time, but the same is true for the native born. Our study suggests that immigrants to Canada have labour market participation dynamics similar to those of the native born.     

Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions

Failure to account for differences between immigrants and natives in their responsiveness to changes in macroeconomic conditions may bias estimates of assimilation effects on immigrant earnings. Using Norwegian register data from 1980 to 1996, we first establish that earnings of immigrants from non‐OECD countries exhibit greater sensitivity to local unemployment than do earnings of natives. The empirical analysis further reveals that standard methods of estimation—which fail to consider differential immigrant and native responsiveness—understate earnings growth and overstate cohort differentials among non‐OECD immigrants. These biases are attributable to trends in macroeconomic conditions over the sample period.     

Psychological Traits and Earnings Differentials among Men: A Study of Second‐generation Immigrants in Sweden*

The purpose of this study is to analyse the impact of psychological traits on earnings differentials between second‐generation immigrants and individuals with native‐born parents. The study is based on a cohort of men born in 1973 and residing in Sweden in 1990. In this paper, we use an indicator of psychological ability measured in connection with the military enlistment test in Sweden. The results show that the measure of psychological traits is an important determinant of earnings at the age of 30. Using an Oaxaca–Blinder decomposition, we find that earnings differentials between second‐generation immigrants and individuals with native‐born parents are explained, to a large degree, by differences in endowments of psychological traits.     

Occupational Attainment and Immigrant Economic Progress in Australia*

Using data from the 2001 Australian Census of Population and Housing, on adult men in full‐time employment, this paper augments a conventional human capital earnings function with information on occupations. It also estimates models of occupational attainment. The results from both the earnings function and model of occupational attainment indicate that the limited international transferability of human capital skills results in immigrants entering into relatively low status occupations when they first enter the Australian labour market. Comparison with similar research for the USA suggests that the different immigrant selection regimes (primarily family reunion in the USA, skill‐based immigration in Australia) do not impact on the negative association between current occupational status and pre‐immigration labour market experience.     

Occupations,fields of study and returns to education

This paper considers several possible channels behind the well‐documented effect of education on earnings. The first channel is that education makes workers more productive on a given task, as in a conventional human capital framework. The second channel is based on the idea that education helps workers get assigned to higher‐paying occupations where output is more sensitive to skill. A third and final channel is that workers are more productive and earn more when they are matched to a job related to their field of study. Using data from the 2005 National Graduate Survey and the 2006 Canadian Census, I find that channels two and three account for close to half of the conventionally measured return to education. The results indicate that the return to education varies greatly depending on occupation, field of study and the match between these two factors.     

Immigrant earnings: age at immigration matters

A correlation between age at immigration and earnings is observed in Canadian census data. The evidence supports three underlying sources of the effect; first, work experience in the source country yields virtually no return in the host country; second, the return to education varies with age at immigration, and, finally, an 'acculturation' effect is observed for immigrants who are visible minorities or whose mother tongue is not English. Further, it is found that educational attainment, and relatedly earnings, vary systematically across age at immigration with those arriving around age 15 to 18 obtaining fewer years of education. JEL Classification: J61, J31     

Is the new immigration less skilled than the old?

This paper analyzes trends in the skills of immigrants to the US in the post-World War II period. Changes in the supply, demand, and institutional factors determining immigration are analyzed for their implications for immigrant skills. During the past 4 decades immigration has shifted from being predominantly European and Canadian in origin to being predominantly Asian and Latin American, and there have been changes in the criteria for rationing immigration visas. Immigrant skills can be analyzed within the context of a model of the supply of immigrants and the US demand for immigrants. Of the Asian immigrants subject to numerical limitation, the proportion who were occupational preference principals declined from 18.2% in 1970, to 11.9% in 1975, to 8.1% in 1981. A growing stock of the foreign-born population who are illegal aliens may lower immigrant quality; for low-skilled workers in neighboring low-income countries the economic incentives for illegal migration are very large. Immigrants from the UK have the highest annual earnings, with Canadian, other European, South Asian, East Asian, and other American immigrants having successively lower earnings. The Mexicans and the Vietnamese have the lowest earnings. Over the period 1950 to 1980, US immigration changed from primarily drawing immigrants from countries whose nationals have high relative earnings in the US primarily drawing immigrants from countries whose nationals do less well. Recent immigrants are less favorably selected on the basis of their level of schooling. The analysis of the relative earnings of immigrants during the 1970s using 3 data files shows there has been little change for white immigrants, an ambiguous pattern for Mexican immgrants, perhaps a small decline for Cuban immigrants, and a small rise for Asian immigrants. Overall, without returning to rationing by country of origin, public policy could raise immigrant skill levels by changing the balance between kinship and the individual's skills in the rationing of visas.     

Skilled and Unskilled Immigrants and Entrepreneurship in a Developed Country

Evidence from some OECD countries suggests that skilled immigrants are over‐represented in entrepreneurship. We offer an analytical explanation to show that it may be a direct outcome of asymmetric information between immigrants and potential employers in the rich countries. Limiting occupational choices to self‐employment and employment, we show that skilled immigrants vis‐à‐vis natives may be proportionally over‐represented in small businesses. This compensates for the income loss in the labor market. It results from higher critical risk aversion among skilled immigrants compared with natives and subsequently leads to higher average income for all immigrants in the cross‐section. Finally, we show why a lesser number of unskilled immigrants enter self‐employment and discuss the speed of income convergence between all immigrants and natives.     

Assimilation of Hong Kong Immigrants in Canada

A flood of emigration from Hong Kong to Canada was observed prior to the handover from Britain back to China in 1997. I pool Canadian Census data from 1991 to 2006 to study the labour market assimilation of Hong Kong immigrants. The findings suggest that these immigrants faced a significant negative wage gap upon entry in comparison with Canadian‐born individuals, and this was larger for cohorts arriving closer to 1997, suggesting a decline in cohort quality. The results also indicate that earnings convergence with the Canadian‐born was slow for the majority of these immigrants.     

Native-immigrant wage differentials in Greece: discrimination and assimilation

This article applies the Blinder–Oaxaca methodology in order to dissect the average earnings differentials between Greek workers and three different groups of immigrants into a part attributed to differences in characteristics and a part due to discrimination. It also seeks to identify the effect of assimilation (i.e. postmigration human capital) on immigrants’ earnings. We use information about 8429 individuals, of which 1185 are immigrants. The data are drawn from the Greek Labour Force Survey (2009). Our results suggest that discrimination is significantly higher for immigrants originating from non-EU countries than it is for EU foreigners, while it is negative for those who terminated education in Greece. Also, there is evidence that (i) post-migration human capital is a significant determinant of immigrants earnings, (ii) there is limited transferability of skills between sending countries and Greece and (iii) education is the main determinant of the wage gap between natives and immigrants.     

The educational attainment of immigrants: trends and implications

"This paper uses the 1970, 1980, and 1990 U.S. Censuses to study trends in educational attainment of immigrants relative to natives. Immigrants have become relatively less highly educated, but have become more highly educated in an absolute sense. The effects of changes in relative educational attainment between immigrants and natives on earnings are studied. Educational differences are found to explain more than half the observed wage gap between the two groups. The paper also allows for non-linearities in returns to education. Sheepskin effects influence earnings in different ways for natives and immigrants. Differences in returns to pre- and post-migration education also appear. The paper also finds evidence that immigrants crowd natives out of education, although the effects are stronger in secondary than in postsecondary education."     

Promoting entry of high-quality workers through US immigration policy

We examine how US immigrants would be affected by applying a simple point system for admission, as Canada does. Since US immigration policy emphasizes family reunification, immigrants have lower education and earnings than natives, with unauthorized immigrants’ education below legal ones. Using American Community Survey data, and Center for Migration Studies data, which allows us to distinguish legal from unauthorized immigrants, we examine the effects of requiring immigrants to meet 2 of 3 conditions: (1) a high school or college degree, (2) being less than 40 years old and (3) working in a professional occupation, while admitting the same numbers of immigrants. This policy changes the source countries of immigrants and there are large positive effects on immigrant earnings. Immigrants’ use of government transfer programs is reduced to below natives and income inequality falls. Finally, with existing policy, immigrant earnings growth is not enough to overtake natives given immigrants’ entering earnings disadvantage. With this point system, immigrants start at a higher level and surpass natives relatively quickly.     

Return Versus onward Migration: Go Back or Move On?

This paper examines the impact of unemployment on out-migration by distinguishing between return and onward migration and controlling for total earnings. We use Timing-of-Events models and control for the endogeneity of total earnings, unemployment and out-migration using administrative data from the Netherlands. Our findings suggest that unemployment triggers return migration more than onward migration. When total earnings are low unemployment increases the hazard of return migration. When total earnings are high the hazard rate of onward migration for unemployed immigrants increases. Thus, these findings highlight that out-migration is affected both by unemployment and by total earnings as well as by the interaction between the two.     

IMMIGRANT WAGE GROWTH IN THE UNITED STATES: THE ROLE OF OCCUPATIONAL UPGRADING

Immigrants to the United States routinely take jobs below their skill qualifications because of barriers to entering occupations. We use a structural model of immigrant job choice to quantify the benefits of potential policies to promote entry into suitable occupations. We estimate the model using longitudinal labor market data on immigrants to the United States. Our counterfactual results show that eliminating barriers to occupational entry would lead to only a small earnings increase for the average immigrant in our sample, but a substantial earnings increase for the most highly skilled immigrants.     

Ethnic enclaves and immigrant earnings growth

Abstract.  The impact of living in an ethnic enclave on earnings growth of immigrants in Canada is examined using the 1981–2001 Censuses. Consistent with U.S. findings, enclaves are found to have a negative impact on the earnings growth of male immigrants. A negative impact is also found for female immigrants. Living in an enclave was found to be particularly harmful for individuals immigrating as adults, especially for females, but did not affect immigrants who arrived at a young age. Enclaves had a more negative impact on high-skilled male immigrants, especially if they had received the bulk of their education outside Canada. Enclaves were also found to hinder language skills.     

Changes in Occupational Tasks and Their Association with Individual Wages and Occupational Mobility

This study provides novel evidence on the relevance of task content changes between and within occupations to wage dynamics of occupational changers and stayers. I use individual‐level, cross‐sectional data featuring tasks performed on the job to compute a measure of proximity of job contents. Then, I merge this measure to a large‐scale panel survey to show that occupational changers experience a wage growth that is declining when the accompanying alterations in task contents are big. For occupational stayers, alterations in task contents generate a positive wage component, beyond tenure effect. However, the results are not robust with respect to the choice of proximity measure and over time.     

Sex Discrimination in the Reward for Skills and Experience in the Australian Labour Force*

Human capital equations are estimated for males and females in Australia, which express earnings as the product of endowments and the return on these endowments. The results are used to examine the effect of discrimination on the difference in the average earnings. The effect of occupational segregation on the earnings of women is also examined.     

Human capital accumulation: Evidence from immigrants in low-income countries

This paper offers new evidence on the theory of human capital accumulation. The current findings in developed countries have documented that immigrants' earnings growth exceeds that of natives and that immigrants upgrade their occupations over time. Three possible explanations for these observations are suggested in the literature: 1) immigrants accumulate more human capital than natives, 2) immigrants are not able to fully transfer their skills, so over time, they restore the value of source-country human capital, and 3) immigrants are more productive than natives because they are positively selected on ability. This study investigates the labor market outcomes of immigrants in low-income countries and finds that immigrants earn more than comparable natives and work in better-paid occupations. Over time the gap in earnings and occupational distribution between immigrants and natives narrows. This observation is more consistent with the predictions of human capital accumulation theory than with skill transferability and selection theories.     

Rates of Return to Four‐Year University Education: An Application of Regression Discontinuity Design

It is invariably difficult to estimate the rate of return to university education, because of the problem of omitted variable bias. Using a regression discontinuity design, we estimate the effect of a four‐year university education on earnings, and we explore the pathways through which the effect operates. Our estimation exploits the centralized, score‐based college/university admission system in China, where the minimum scores required for university admission are externally determined by the provincial governments. Our findings suggest that being eligible for four‐year university admission implies a sizable increase in earnings. The payoff can be attributed to the prolonged length of education and improvements in education quality, although the quality effects cannot be precisely estimated.