Labor Market Assimilation of Immigrants Public Deposited

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  • March 21, 2019
  • Jain, Apoorva
    • Affiliation: College of Arts and Sciences, Department of Economics
  • The economic contribution of migrants to a host country are well known: they work in sectors where labor is scarce, create jobs when becoming entrepreneurs, and also contribute by paying taxes. For such potential contributions to materialize, immigrants' successful participation in the labor market is crucial. This dissertation analyzes the process of immigrant assimilation in the host country's labor market. The dissertation consists of two chapters, both of which use German Socio-economic Panel from 1984 to 2014. Germany's long history of immigration and the availability of a long panel dataset makes the country a good choice for this study. In the first chapter, Timing of Migration, Immigrant Quality and Labor Market Assimilation: Evidence from a Long Panel in Germany, I quantify how much immigrants assimilate with each additional year spent in the host country. Hence, assimilation occurs if, between two observationally equivalent immigrants, the one with greater time in Germany typically earns more. The innovation of this chapter is to account for selection into the timing of migration. I do so by jointly estimating an equation that explains variation in the timing of migration and an equation that explains variation in wages while controlling for length of time in the host country. The results show that a failure to account for the endogenous timing of migration results in an upward bias in the commonly estimated average rate of assimilation. Additionally, the estimates from the joint model reveal three key findings. First, there is significant heterogeneity in individual-specific rates of assimilation among immigrants. Second, immigrants of low quality have a faster rate of assimilation than their high quality counterparts. Third, immigrants who have a greater propensity to migrate early have a higher individual rate of assimilation. The second chapter, Limits to Wage Growth: Understanding the Wage Divergence between Natives and Immigrants with Klara S. Peter, begins where the first chapter concludes. The goal is to study the assimilation of immigrants with respect to natives and examine the factors of assimilation that explain the significant variation found in individual rates of assimilation. We find strong evidence of wage divergence between natives and immigrants. To understand the factors behind the wage divergence, we theoretically derive testable hypotheses of immigrant wage growth and empirically test them using a wage convergence model. Individual rates of wage convergence are found to be higher for immigrants who fled the warfare zones, belong to sizable ethnic networks, and acquired more years of pre-migration schooling. One of the major contributions of the chapter is to account for endogeneity in the accumulation of post-migration human capital, one of the factors of immigrant wage growth. This endogeneity has largely been ignored in the previous literature. We find that post-migration human capital significantly increases immigrant's wage growth and thus decreases the likelihood of wage divergence. The chapter also addresses the commonly ignored sample selection issue due to non-random survey attrition and employment participation.
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  • In Copyright
  • Flabbi, Luca
  • Peter, Klara
  • Gilleskie, Donna B.
  • Tauchen, Helen
  • Becker, Charles
  • Doctor of Philosophy
Degree granting institution
  • University of North Carolina at Chapel Hill
Graduation year
  • 2017

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