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.     

The visible minority earnings gap across generations of Canadians

Abstract To what extent the earnings gaps facing Canada’s visible minorities reflect discrimination is a question of tremendous policy interest. This paper argues that failing to account for the limited Canadian ancestry of visible minorities overestimates discrimination if immigrant assimilation is an intergenerational process. Using the 2001 and 2006 Canadian Censuses, weekly earnings, conditional on a rich set of worker and job characteristics, are compared with child immigrant, second‐, and third‐and‐higher‐generation Canadian men. The results reveal a tendency for earnings to increase across subsequent generations of visible minority, but not white, men. Though the pattern is strongest between the first and second generation, for black men it is also evident between the Canadian born with and without a Canadian‐born parent. Despite this progress, for most visible minority groups earnings gaps are identified even among third‐and‐higher‐generation Canadians.     

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.     

Impact of Low‐Skilled Immigration on Female Labour Supply

In this paper, segmenting the market by educational levels, we investigate which native‐born women are more affected by an increase of low‐skilled immigrants working in the household service sector. We present a model of individual choice with home production and, using a harmonized dataset (the Cross‐National Equivalent File), we estimate its main comparative static results. The results suggest that the share of immigrants working in services is positively associated with an increase of native‐born women's labour supply at the intensive margin, if skilled, and at the extensive margin, if unskilled. Moreover, the results show that these effects are larger in countries with less‐supportive family policies.     

The earnings of male immigrants in England: evidence from the quarterly LFS

"In this paper we estimate earnings functions for native born and foreign born white and non-white males in the English labour market, using data from the Quarterly Labour Force Survey.... Our results highlight the importance of distinguishing between native born and foreign born males when investigating the labour market experience of ethnic minorities. Furthermore, the earnings performance amongst white immigrants varies considerably."     

Why do immigrant workers in Australia perform better than those in Canada? Is it the immigrants or their labour markets?

Research comparing the labour market performance of recent cohorts of immigrants to Australia and Canada points to superior employment and earnings outcomes in Australia. Examining Australian and Canadian Census data between 1986 and 2006, we find that this performance advantage is not driven by differences in broader labour market conditions affecting all new labour market entrants. Rather, the results from comparing immigrants from a common source country – either the U.K., India, or China – suggest that Australian immigrants perform better, particularly in average earnings, primarily because of a different source country distribution. Moreover, the recent tightening of Australian selection policy, most notably its use of mandatory pre‐migration English‐language testing, appears to be having an effect, primarily by further shifting the source country distribution of immigrants away from non‐English‐speaking source countries, rather than in identifying higher‐quality migrants within source countries.     

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.     

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.     

Collectivism in the labor market: Evidence from second generation immigrants in the United States

This study investigates the role of collectivism on labor market outcomes in an individualist country. We explore collectivism as an intergenerationally transmitted cultural value and analyze its explanatory power for the economic outcome of 21,000 male homogamous second generation immigrants in the US. Our collectivism proxy is derived from the country of ancestry’s historical disease environment because collectivistic values have been particularly advantageous in countries with a greater prevalence of disease-causing pathogens. Employing this new collectivism proxy that identifies collectivism more precisely than previously used cultural proxies, we find that higher scores of collectivism are associated with higher labor force participation and income earned in the US. The results on income are channeled through the number of hours worked and self-selection into jobs that require collectivistic traits. By analyzing the labor market performance of second generation immigrants, we are the first to show an occupational selection along cultural skills implying that second generation immigrants sort into occupations that demand skills on which they have a “cultural comparative advantage”.     

How important is cultural background for the level of intergenerational mobility?

Based on brother correlations in permanent earnings for different groups of second generation immigrants, the findings in this paper indicate that cultural background is not a major determinant of the level of intergenerational economic mobility.     

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.     

The Ethnic Employment and Income Gap in Sweden: Is Skill or Labor Market Discrimination the Explanation?*

This study uses a cognitive test score, the Swedish Military Enlistment test taken at age 18, to identify whether the ethnic employment and income gap in Sweden is caused by a pre‐market skill gap and/or ethnic discrimination. The employment gap and income gap are estimated for males born in Sweden with different ethnic backgrounds: their parents were born in Sweden or in southern Europe or outside Europe. Controlling for the cognitive test score does not affect the ethnic employment gap, and for incomes the ethnic income gap almost disappears.     

Parental Income and Continuing Education of Second Generation Immigrants in Sweden

Understanding the economic integration of minority ethnic communities requires an analysis of the educational process. This paper examines second‐generation immigrant youths’ educational attainments in comparison with those of similarly aged native Swedes. Binomial‐logit, grouped‐regression and multinomial‐logit models are applied to longitudinal data, 1991–1996. The results give evidence for socioeconomic determinants of post‐compulsory education and for parental influence on educational choices. Parental income affects second‐generation immigrants’ post‐compulsory education and Swedes’ choice of level of education. In general, the stronger the labour market positions of the parents, the higher the probability of the children continuing education. It is also found that the geographical origin of second‐generation immigrants matter, with youths of Asian origin having a higher probability of continuing their education. We suggest policy changes on different levels based on the evidence of the paper, as short‐run, long‐run and in general.     

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.     

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.     

Second‐Generation Immigrants in the Swedish Labour Market

This study focuses on the labour market performance among second‐generation immigrants in Sweden. One motivation behind the analysis is that it gives insight into the long‐term consequences of immigration. Labour market performance relates the probability of having a job, referred to here as a threshold effect and to the differences in income from work, given that a person is in the market and is referred to as an income from work effect. We have shown that a clear threshold effect of being a second‐generation immigrant exists and that different groups of second‐generation immigrants perform differently in the Swedish labour market.     

IMMIGRANT RELATIVE WAGES AT THE GREAT RECESSION: EVIDENCE WITH MATCHED EMPLOYER‐EMPLOYEE DATA FOR SPAIN

The article examines relative wages of immigrants in Spain, with a particular focus on the impact of the Great Recession. The empirical analysis is restricted to men and is based on matched employer‐employee microdata and the decomposition techniques of Juhn et al. (1991, 1993) and Fortin et al. (2011). Our results show that the significant native‐immigrant wage gap that exists both in terms of average wages and of differentials along the wage distribution is essentially explained by differences in the endowments of observed characteristics so that, in general, immigrants tend to receive a similar wage treatment than Spaniards with analogous observed attributes. On the other hand, the Great Recession has had a noticeable impact on the relative wages of immigrants, given that the significant increase of the native‐immigrant wage gap observed during the previous expansionary period was mitigated during the economic downturn due to composition effects arising from the severe employment destruction pattern.     

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.     

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.     

Social capital and political institutions: Evidence that democracy fosters trust

This paper finds evidence that more democratic political institutions increase trust. Second generation immigrants with ancestries from 115 countries are studied within 30 European countries. Comparing individuals born and residing in the same country, those whose father was born in a more democratic country express higher trust than those whose father was born in a less democratic country. The results are robust to individual, parental, and ancestral country controls.