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.     

The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification

Abstract. We analyse the effects of government-sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to address potential selection bias, to study different types of programmes and to observe labour market outcomes over eight years. We find strong evidence that, on average, the training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.     

Stick,Carrot and Skill Acquisition*

We evaluate the impact of specially designed youth unemployment programmes (YUPs), intended to provide young unemployed unskilled workers with skills. If unemployment among skilled workers is lower than among unskilled workers, YUPs imply that unemployment falls. However, YUPs potentially crowd out ordinary training. We set up an equilibrium matching model with endogenous skill choice and examine the impact of an increase in programme participation. We derive a condition for crowding out of ordinary training, as well as a condition for an increase in the skilled labour force and thereby reduced unemployment. The impact of YUPs on welfare and wage dispersion is also considered.     

APPRENTICES AND YOUNG WORKERS: A STUDY OF THE NORWEGIAN YOUTH LABOUR MARKET

Apprenticeship programmes are in many countries important stepping stones into the labour market. However, recruitment of apprentices seems to follow the business cycle. This pattern may be caused by firms' contemporaneous demand for labour, but may also be consistent with an investment hypothesis. A model, in which the tightness in the labour market is taken into account, is tested on a sample of Norwegian quarterly firm‐specific data. The empirical findings give moderate support to an investment hypothesis. The apprentices substitute to some degree for skilled labour but are recruited primarily based on the labour market situation. The wage level plays a minor role for recruitment of apprentices.     

Economic migration and business cycles in a small open economy with matching frictions

With the free movement of labour in Europe, economic migration has become an important determinant of labour supply. Cyclical migration exceeds one percent of the population in many countries and affects (un)employment and wage setting. The main contribution of this paper is that it models migration as an endogenous decision in a search-and-matching framework, where labour market institutions play an important role. It shows that, contrary to typical beliefs, migration can amplify business cycles. After a positive shock to the economy, immigration increases the labour force and initially unemployment. The latter reduces a worker's outside option in wage negotiations, resulting in a lower wage increase than when there is no migration. With cheaper labour firms post more job vacancies, which increases the probability that unemployed workers find jobs and attracts new workers to immigrate. Attenuated response of wages and the stronger response of employment to shocks result in a flatter Phillips curve.     

JOB FLOWS AND UNEMPLOYMENT IN AN EQUILIBRIUM UNEMPLOYMENT MODEL WITH FIRM‐SPECIFIC SKILL TRAINING*

We introduce productivity enhancing firm‐specific skill training into the labour search model in which the firm‐specific skill training intensity and the job destruction rate are endogenously determined. It is shown that the higher the intensity of such training, the lower the rates of unemployment, job creation and job destruction. The paper's model provides a theoretical framework to understand the often mentioned peculiarity of the Japanese labour market; prevalently low rates of unemployment, job creation and job destruction in Japan are due to its training system which promotes workers to acquire firm‐specific skills.     

The economics of production systems: Segmentation and skill-biased change

In this paper, the concept of production systems is introduced. I assume a standard thick-market externality together with the idea that higher quality goods also require higher skills from workers. Firms face a trade-off between low-quality goods with low skill-requirements for which the potentially abundant labour force generates strong thick-market externalities and higher quality goods with higher skill-requirements. In equilibrium, the economy is partitioned into production systems, i.e., clusters of firms producing the same quality. The distribution of skills determines the boundaries of the production systems, which in turn determine the wages. In this framework an increase in the supply of skilled workers can induce first higher wages for all workers and then higher wages for the skilled but lower wages for the unskilled. This is consistent with the late 20th century evolution of the US labour market.     

RISK AVERSION AND FIELD OF STUDY CHOICE: THE ROLE OF INDIVIDUAL ABILITY

Does the choice of field of study depend on individual risk aversion? The direction of the relationship between individual risk attitudes and type of university degree chosen is potentially ambiguous. On the one hand, risk averse individuals may prefer degree courses which allow high returns in the labour market; on the other hand, if these degrees expose students to a higher probability of dropping out, those who are more risk averse may be induced to choose less challenging fields. Using data from a sample of students enrolled at a middle‐sized Italian public university in 2009, we find that, controlling for a large number of individual characteristics, more risk averse students are more likely to choose any other field (Humanities, Engineering, and Sciences) rather than Social Sciences. We interpret this result bearing in mind that some of these fields, such as Humanities, involve a reduction in the risk of dropping out, while others (such as Engineering and Sciences) involve a lower risk in the labour market. It also emerges that the effect of risk aversion on degree choice is related to student ability. Risk averse students characterized by high abilities tend to prefer Engineering, while the propensity of risk averse students to enrol in Humanities decreases when ability increases, suggesting that the attention paid to labour market risks and drop‐out risk varies according to student skills.     

DETERMINANTS AND DYNAMICS OF SCHOOLING AND CHILD LABOUR IN BOLIVIA

This paper investigates the determinants of primary school enrolment, attendance, and child labour in Bolivia from 1999 to 2007, and attempts to analyse the interactions among these decisions over time. Although enrolment rates show a significant improvement, a high proportion of children do not attend school. The empirical results reveal that the increase in enrolment is led by indigenous children and those living in urban areas. Moreover, contrary to common belief, being extremely poor and indigenous are the main determinants of school attendance. Finally, although extremely poor children increased their school attendance, there was no reduction in child labour, which remains a relevant issue in Bolivia.     

What a Difference Immigration Policy Makes: A Comparison of PISA Scores in Europe and Traditional Countries of Immigration

Abstract. The purpose of this article is to evaluate the importance of different immigration policies associated with corresponding migration backgrounds, command of national languages and intergenerational mobility, for the PISA school performance of teenagers living in European countries (France, Finland, Germany, United Kingdom and Sweden) and traditional countries of immigration (Australia, Canada, New Zealand and the US). Econometric results show that the influence of the socioeconomic background of parents differs strongly across nations, with the highest impact found for Germany, the UK and US, whereas intergenerational transmission of educational attainment is less likely in Scandinavian countries and in Canada. Moreover, for all countries our estimations imply that for students with a migration background a key for catching up is the language spoken at home. We conclude that educational policy should focus on integration of immigrant children in schools and preschools, with particular emphasis on language skills at the early stage of childhood.     

Skill Formation,Immigration and European Integration: The Politics of the UK Growth Model

ABSTRACT

While a reluctant European player now heading for the Exit, the UK was also an enthusiastic adopter of several key EU economic policies – namely, the skills and technology policies of Agenda 2020 and labour mobility. These initiatives worked with existing British policy, and structural biases, to exacerbate the already bifurcated structure of UK capitalism – between the high-paid technology and financial services sector on the one hand, and low-cost, low-wage sectors on the other hand. In particular, and central to the argument of this paper, immigration from Eastern and Central Europe after 2004 helped to sustain low-cost manufacturing and services industries by undermining firms’ incentives to invest in training. This combined with endemic failures in the UK’s skills system, which is heavily geared towards producing graduates with general skills but neglects the needs of mid and lower segments of the labour market. EU integration, therefore, exacerbated cleavages over skills between high- and low-productivity sectors and may have contributed to social divisions that led to Brexit.     

Active labour market policy in East Germany

We investigate the effects of the most important East German active labour market programmes on the labour market outcomes of their participants. The analysis is based on a large and informative individual database derived from administrative data sources. Using matching methods, we find that over a horizon of 2.5 years after the start of the programmes, they fail to increase the employment chances of their participants in the regular labour market. However, the programmes may have other effects for their participants that may be considered important in the especially difficult situation experienced in the East German labour market.     

The Impact of Immigration on a Depressed Labour Market: The South Australian Experience*

This paper examines the impact of immigration on the relatively depressed labour market in South Australia during the 1976-81 inter-censal period. The findings indicate that recently arrived immigrants have experienced exceedingly high unemployment rates. However, this is consistent with the view that immigration generates additional job opportunities for Australian residents (except in the manufacturing industry and trades occupations), and that immigrants experience high unemployment rates specifically because they have been unable to compete a 'fair share' of jobs away from residents already entrenched in the labour market.     

The impact of immigration on a depressed labour market: the South Australian experience

"This paper examines the impact of immigration on the relatively depressed labour market in South Australia during the 1976-81 inter-censal period. The findings indicate that recently arrived immigrants have experienced exceedingly high unemployment rates. However, this is consistent with the view that immigration generates additional job opportunities for Australian residents (except in the manufacturing industry and trades occupations), and that immigrants experience high unemployment rates specifically because they have been unable to compete a 'fair share' of jobs away from residents already entrenched in the labour market."     

Immigration policy and employment assimilation in the United States

We examine the impact of immigration policy on the employment propensity and assimilation of immigrants using a pooled cross-section of the 1994–2004 Current Population Surveys (CPS). The results are generally consistent with positive immigrant employment assimilation. A Blinder–Oaxaca style decomposition shows that the foreign-born obtain more employment primarily through human capital acquisition and changes in labour market conditions rather than higher returns to observable skills, as sometimes seen in wage studies. In addition, our analysis suggests that immigration policies may influence both labour demand and supply incentives and are associated with structural shifts in the labour market.     

Offshoring,immigration, and the native wage distribution

Abstract This paper presents a simple model that examines the impact of offshoring and immigration on wages and tests these predictions using U.S. state‐industry‐year panel data. According to the model, the productivity effect causes offshoring to have a more positive impact on low‐skilled wages than immigration, but this gap decreases with the workers’ skill level. The empirical results confirm both of these predictions and thus present direct evidence of the productivity effect. Furthermore, the results provide important insight into how specific components of offshoring and immigration affect the wages of particular types of native workers.     

The Good,the Poor and the Wealthy: who Responds Most to College Financial Aid?

Financial aid programmes for students in the United States focus increasingly on academic merit, rather than financial need. There is little empirical evidence, however, on the distributional effects of merit–based aid – who benefits or responds most. We develop a bivariate probit model of the enrolment process estimated using data for a large public university over several years. Results show that merit–based aid increases enrolment for all students, but that financially–able students respond disproportionately, even with academic merit held constant. Thus, increased emphasis on merit in financial aid may exacerbate the trend toward greater income inequality in the US, even among students of equal academic merit.     

Do Immigrants Affect Firm‐Specific Wages?*

We propose and test a novel effect of immigration on wages. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, immigrants might also affect wage formation at the most disaggregate level – the workplace. Using linked employer?employee data, we find that an increased use of low‐skilled immigrant workers has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and instrumental variables.     

Do stock prices react to immigration restrictions? Evidence from an event study in Switzerland

This article tests the effects of sudden immigration restrictions on stock prices of firms in industries with high shares of immigrants. It estimates the abnormal returns as a function of the share of migrants by industry. To do so, one specific event – a referendum on migration policy with an unexpected outcome – that will potentially cut off Swiss listed companies from the supply of foreign labour is studied. Although operating in an industry with a high share of immigrants is associated with lower returns, the effect is not very strong, which indicates that investors seem to trust the government to leave some leeway in the implementation of the constitutional amendment that was voted on.     

The dynamic impact of immigration on natives' labor market outcomes: Evidence from Israel

This paper studies the short and medium run impact of highly skilled immigrants from the Former Soviet Union to Israel on natives' wages and employment. If immigrants are relatively good substitutes for native workers, the impact of immigration will be largest immediately upon the immigrants' arrival, and may become smaller as the labor market adjusts to the supply shock. Conversely, if immigrants upon arrival are poor substitutes for natives, the initial effect of immigration is small, and increases over time as immigrants acquire local labor market skills and compete with native workers. We empirically examine these alternative hypotheses using data from Israel between 1989 and 1999.We find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a labor market segment. A 10 percent increase in the share of immigrants lowers natives' wages in the short run by 1–3 percent, but this effect dissolves after 4–7 years. This result is robust to a variety of different segmentations of the labor market, to the inclusion of cohort effects, and to different dynamic structures in the residual term of the wage equation. On the other hand, we do not find any effect of immigration on employment, neither in the short nor in the medium run.