The impact of welfare benefits on natives' and immigrants' attitudes toward immigration

We investigate the effect of the relative welfare dependence of immigrants on attitudes toward further immigration of different groups of the population in a pooled cross-section of 24 European countries for the 2004–2010 period. Explicitly controlling for the dependence of immigrants and natives on welfare benefits we find that in countries with higher take-up rates among immigrants relative to natives pro-immigration attitudes, very robustly, increase more strongly with increasing educational attainment and, slightly less robustly, decline more strongly with the age of natives. Within the group of immigrants, by contrast, the impact of age on pro-immigration attitudes is more favorable with increasing relative benefit take-up of immigrants.     

Immigration and welfare magnets

"This paper investigates if the location choices made by immigrants when they arrive in the United States are influenced by the interstate dispersion in welfare benefits. Income-maximizing behavior implies that foreign-born welfare recipients unlike their native-born counterparts, may be clustered in the states that offer the highest benefits. The empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high-benefit states than the immigrants who do not receive welfare, or than natives. As a result, the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives."     

Risk aversion and the earnings of US immigrants and natives

The literature on the earnings of natives and immigrants has heretofore ignored differences in compensating wages for job risks. It is possible that the risk involved in migration may indicate a greater willingness on the part of immigrants to accept riskier jobs than natives. Alternatively, immigrants may attempt to protect their migration investment by choosing occupations with less risk, indicating a higher degree of risk aversion. This paper examines differences in risk aversion between US immigrants and natives, and corresponding differentials in wage premiums for job risk. Our analysis suggests that on average immigrants are exposed to 21% less risk than natives, but receive a 25% higher risk premium. The higher degree of risk aversion of immigrants and their lower exposure to risk, and thus lower earnings, explains 5% of the higher observed earnings of natives. We also find that earlier immigrant cohorts (pre-1970) are employed in riskier jobs than are recent cohorts, but the difference accounts for only a small portion of the observed earnings differential. Finally, we estimate statistical values of life of $3.6 million for US natives and $4.6 million for immigrants, well within the range of previous studies.     

Assimilation to a Welfare State: Labor Market Performance and Use of Social Benefits by Immigrants to Finland*

This paper documents the economic performance of immigrants in a country characterized by an extensive welfare state and a short immigration history. Upon arrival, immigrants to Finland have substantially lower employment rates than comparable natives. While they experience rapid employment growth, only men from OECD countries catch up with natives. Despite the persisting employment and earnings differences between non‐OECD immigrants and natives, the differences in income transfers disappear in roughly 20 years. The immigrant–native employment gaps are larger in Finland than in Australia, Canada, or the US.     

Education, credentials, and immigrant earnings

Abstract.  Using 1981 to 2001 Census data, we study how the human capital of immigrants is rewarded in Canada. We distinguish between years of schooling and degrees obtained in order to estimate 'sheepskin' effects – the gain in earnings associated with receipt of a degree, controlling for years of schooling. We find that immigrant years of schooling and immigrant work experience accumulated before arrival is valued much less than Canadian experience of comparable natives. However, for immigrants the increase in earnings associated with completing educational programs is generally higher than that of comparable natives. We provide both signalling and human capital interpretations of this finding.     

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.     

Migration Policy in a Small Open Economy with a Dual Labor Market

The paper uses a two–sector efficiency–wage model to analyze the consequences of immigration for a small open economy with a dual labor market. Immigrants are characterized by an (exogenous) return probability. Legal regulations impose preferential hiring of natives or "old" immigrants. As a result, there is sectoral segregation between natives and immigrants, leading to discrimination of the type equal pay for equal work,but unequal "work." In the short run (with sector–specific capital), immigration has a positive first–order impact on natives' welfare if migration policy favors segregation through high return rates or restrictive hiring practices ("guest–worker system"). In the long run, its effect is only determined by factor intensities (2 ¥ 2 model). Finally, the improved integration of migrants yields efficiency gains and improves aggregate welfare of all residents.     

Income from Work Among Immigrants in Sweden

This paper uses a two-step Heckman approach to investigate to what extent there are differences in income from work between immigrants and natives in Sweden. Contrary to previous studies this study takes the selection effect, i.e. the probability of having an income from work, into account when calculating the effect on income from work of a change in any of the explanatory variables. Our study shows that when the selection effect is taken into account, the differences in income from work between immigrants and natives are smaller than when the selection effect is not considered. We find that immigrants have a lower income from work than the native population when we control for variables such as schooling, experience, civil status and region of residence. Furthermore, immigrant cohorts with a recent year of immigration have a considerably lower income from work than earlier immigrant cohorts.     

The effect of immigrants on natives' incomes through the use of capital

"This paper deals with questions about the effects of immigrants on three types of capital: the private capital immigrants work with, the public (government) capital that immigrant workers use, and the public capital used for services by immigrants." The geographic focus is on the United States. The authors conclude that although the average cost to natives in 1975 dollars to provide services for immigrants is 4,172 dollars, this amount "is considerably smaller than the benefits of immigrants to natives through their relatively low use of welfare services and their relatively high contribution of taxes." Comments by Jacob Mincer (pp. 95-7) are included.     

The effects of immigration in frictional labor markets: Theory and empirical evidence from EU countries

Immigrants are newcomers in a labor market. As a consequence, they lack host-country-specific labor market knowledge and other country-specific and not directly productive valuable assets affecting their relative bargaining position with employers. We introduce this simple observation into a search and matching model of the labor market and show that immigrants increase the employment prospects of competing natives. To test the predictions of our model, we exploit yearly variations between 1998 and 2004 in the share of immigrants within occupations in 13 European countries. We identify the impact of immigrants on natives׳ employment rate using an instrumental variable strategy based on historical settlement patterns across host countries and occupations by origin country. We find that natives׳ employment rate increases in occupations and sectors receiving more immigrants. Moreover, we show that this effect varies depending on immigrants׳ characteristics and on host country labor market institutions which affect relative reservation wages.     

Immigrant job search assimilation in Canada

Immigrant assimilation is a major issue in many countries. While most of the literature studies assimilation through a human capital framework, we examine the role of job search assimilation. To do so, we estimate an equilibrium search model of immigrants operating in the same labour market as natives, where newly arrived immigrants have lower job offer arrival rates than natives but can acquire the same arrival rates according to a stochastic process. Using Canadian panel data, we find substantial differences in job offer arrival and destruction rates between natives and immigrants that are able to account for three quarters of the observed earnings gap. The estimates imply that immigrants take on average 13 years to acquire the native search parameters. Due to immigrants facing much lower on‐the‐job offer arrival rates than natives, the model predicts that earnings growth through job search is minimal for immigrants prior to their job search assimilation.     

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.     

Dynamic Properties of Income Support Receipt in Australia

Using administrative records on Australian income support (welfare) recipients over the period July 1995 to June 2002, we examine dynamic properties of income support receipt and the personal characteristics associated with alternative patterns of receipt. We draw on three concepts: churning–the process of ending a spell on income support and subsequently commencing a new spell; transferring–moving from one payment type to another within a spell on income support; and Total Time On payments (TTO)–the proportion of time on income support in a given period. We find that churning and transferring are significant features of income support receipt in Australia. For example, over half of recipients churn within five years of commencing an income support spell, and one‐fifth make a payment transfer within the same time frame. Examination of the characteristics associated with each of five distinct patterns of receipt reveals substantial differences in patterns by age, family composition, unemployment status, health status, and recent history of income support receipt.     

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.     

Parental Background Matters: Intergenerational Mobility and Assimilation of Italian Immigrants in Germany

We investigate the hypothesis of failed integration and low social mobility of immigrants. An intergenerational assimilation model is tested empirically on household survey data and validated against registry data provided by the Italian Embassy in Germany. Although we confirm substantial disparities between educational achievements of immigrants and natives, we find that the children of Italian immigrants exhibit high intergenerational mobility and no less opportunity than natives to achieve high schooling degrees. These findings suggest a rejection of the failed assimilation hypothesis. Additionally, we evaluate different patterns by time of arrival, Italian region of origin and language spoken at home.     

Employment, wages, and the economic cycle: Differences between immigrants and natives

In this paper, we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries, Germany and the UK. We show that, despite large differences in their immigrant populations, there are similar and significant differences in cyclical responses between immigrants and natives in both countries, even conditional on education, age, and location. We decompose changes in outcomes into a secular trend and a business cycle component. We find significantly larger unemployment responses to economic shocks for low-skilled workers relative to high-skilled workers and for immigrants relative to natives within the same skill group. There is little evidence for differential wage responses to economic shocks. We offer three explanations for these findings: an equilibrium search model, where immigrants experience higher job separation rates, a model of dual labour markets, and differences in the complementarity of immigrants and natives to capital.     

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."     

Health spending in Italy: The impact of immigrants

The welfare impact of immigration is a highly debated issue especially for countries on the external borders of the European Union. This paper studies how immigrants affect public health expenditure across Italian regions during the period 2003–2016 using NUTS II level data. Identification strategy is based on shift–share instruments, which are made robust to pull factors that might attract immigrants in Italy and to internal migration of natives. We find that a 1 percentage point increase in immigrants over total resident population leads to a decrease in public health expenditure per capita by about 3.8% (i.e. around 69 euro per capita). Among possible channels, we find no support for any crowding out effect from public to private health services by natives due to increasing immigration or for any role played by different levels of efficiency across regional health systems. Our results are driven by immigrants' demographic structure: they are mostly males and younger workers that call for less health spending, according to a positive selection mechanism. Moreover, linguistic barriers contribute to limiting the immigrants' reliance on public healthcare, which is confirmed also by the use of the European Health Interview Survey microdata.     

OPENING THE FLOODGATES: PARTIAL AND GENERAL EQUILIBRIUM ADJUSTMENTS TO LABOR IMMIGRATION

We investigate the impact of a large immigration shock on occupational wages. We develop a general equilibrium model where individuals sort into occupations and confront testable hypotheses with data. To identify the effect of the labor supply shock, we introduce a novel instrument that exploits that immigrants systematically sort into different occupations than natives. We study the immigration wave to Norway after the Eastern enlargement and find that immigration led to lower relative occupational wages. A quantification of the general equilibrium shows welfare effects of immigration close to zero for natives, but negative effects for the pre-existing population of immigrants.     

Selective immigration policy and its impacts on Canada's native‐born population: A general equilibrium analysis

This paper analyzes the effects of skilled immigration on the wage inequality between different education groups and the welfare of the incumbent population. I use a heterogenous agent overlapping generations model with endogenous discrete college education choice and calibrate it to match the features of 1981 Canadian economy. My quantitative analysis suggests that reducing the skilled immigration rate generates a rise in the growth rate of the wage inequality between college‐educated and non‐college workers. As skilled immigrants are admitted at a lower rate, more natives opt for college education in the economy. My welfare analysis shows that the incumbent young and college‐educated population benefits more from a reduction in the skilled immigration rate. On the other hand, young generations with below college education face welfare losses. My results suggest that skilled immigration contributes positively to the overall welfare in the economy.