Table Of ContentPopulation Economics
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John Ermisch
Bengt-Arne Wickstrom
Klaus F. Zimmermann
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Amelie Constant
Editors
How
Labor Migrants
Fare
With 34 Figures
and 114 Tables
Springer
Professor Dr. Klaus F. Zimmermann
Forschungsinstitut zur Zukunft der Arbeit (IZA)
Schaumburg-Lippe-StraBe 7-9
53113 Bonn, Germany
zimmermann @iza.org
Dr. Amelie Constant
University of Pennsylvania
Population Studies Center
Locust Walk 3718
19104 Philadelphia, PA, USA
[email protected]
ISBN 978-3-642-53448-5 ISBN 978-3-540-24753-1 (eBook)
DOI 10.1007/978-3-540-24753-1
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Contents
Part I Introduction
Constant A, Zimmermann KF
How do labor migrants fare? . . . . 1
Part II Migration and Earnings
Hatton T1, Bailey RE
Natives and migrants in the London labour market, 1929-1931 . . 13
Hatton TJ
How much did immigrant "quality" decline
in late nineteenth century America? . . .37
Longva P, Raaum 0
Earnings assimilation of immigrants in Norway -
A reappraisal . . . . . . . . . . · .. 55
Constant A, Massey DS
Self-selection, earnings, and out-migration:
A longitudinal study of immigrants to Germany .. 73
Hartog 1, Winkelmann R
Comparing migrants to non-migrants:
The case of Dutch migration to New Zealand · .. 97
Part III Employment. Unemployment. Self-Employment
and Occupational Success
Bevelander P, Nielsen HS
Declining employment success of immigrant males in Sweden:
Observed or unobserved characteristics? . . . . .. . .121
Wheatley Price S
The employment adjustment of male immigrants in England . .139
Shields MA, Wheatley Price S
The English language fluency and occupational success
of ethnic minority immigrant men living
in English metropolitan areas. . . . . . . . . . · . .167
VI Contents
Lofstrom M
Labor market assimilation and the self-employment decision
of immigrant entrepreneurs . . . . . . . . . . 191
Part IV Linguistic Issues and Educational Attainment
Chiswick BR, Miller PW
Immigrant earnings:
Language skills, linguistic concentrations and the business cycle. .223
Riphahn RT
Cohort effects in the educational attainment
of second generation immigrants in Germany:
An analysis of census data. . . . . . . . . . .251
Part V Illegal, Legalized and Unwilling Migrants
Chiswick BR, Miller PW
Language skills and earnings among legalized aliens. . . . . . 279
Rivera-Batiz FL
Undocumented workers in the labor market:
An analysis of the earnings of legal and illegal Mexican immigrants
in the United States . . . . . . . . . . . .307
Kossoudji SA, Cobb-Clark DA
IRCA's impact on the occupational concentration and mobility
of newly-legalized Mexican men. . . . . . . . . . . . .333
Kuhn P, Sweetman A
Aboriginals as unwilling immigrants:
Contact, assimilation and labour market outcomes .351
Part VI Policy Issues: Selection Criteria and Public Sector Effects
Cobb-Clark DA
Public policy and the labor market adjustment
of new immigrants to Australia . . . . . . .377
Gustafsson B, Osterberg T
Immigrants and the public sector budget -
accounting exercises for Sweden. . . . .405
How do labor migrants fare?
Amelie Constant)' 2, Klaus F. Zimmermann)' 3
1 IZA, P.O. Box 7240, 53072 Bonn, Germany
(e-mail: {constant; zimmermann}@iza.org)
2 IZA and Population Studies Center, University of Pennsylvania, USA
3 IZA, Berlin, Bonn University and Free University of Berlin
1. Introduction
Migration is now a major area of interest in economics. This is fostered by a
few global developments: The differences in economic growth among
countries prevail or even rise and the freedom of moving is increasing. The
demographic gaps between various regions across the world become more
marked; aging and shrinking populations at one side and growing popula
tions at the other side provide further motives for mobility. Globalization of
information and production provides a stronger pressure on countries to
adjust, and the demand for speed can only be satisfied by migrants. The rising
importance of human capital in the production of goods and services around
the world is followed by a decline in the demand for unskilled labor. This
causes migratory moves from two adverse situations: There is excess demand
and hence global competition for high-skilled workers who will work more
flexible across countries and throughout their working life. Low-skilled
workers, who exhibit excess supply on their labor markets, become more and
more forced migrants who have to move to find a safe heaven in their struggle
to satisfy their basic economic needs and better their lives. It is hard to find a
country that has not been touched by migration.
These challenges are covered by the migration literature only in a very
limited way. Research has clustered around four major research themes:
(i) the determinants of migration, (ii) the assimilation of the migrants, (iii)
the effects of immigrants on the natives, and (iv) migration policy. A
number of recent books deal with these issues: The series of articles con
tained in the four book volumes on the "Economics of Migration" selected
by Zimmermann and Bauer (2002) from a rich literature on mobility has set
a particular focus on work, within this framework, relevant to the European
situation. The book "Migration" edited by Faini, de Melo and Zimmermann
(1999) has investigated the interactions between migration, trade and
development. And the book "Immigration Policy and the Welfare System"
edited by Boeri, Hanson and McCormick (2002) provides a recent update
and an overview of migration data and policy issues for Europe and the
United States.
2 A. Constant, K. F. Zimmermann
There is still a substantial lack of empirical evidence for the European
countries. Hence, the new book edited by Zimmermann (2004) on "European
Migration: What Do We Know?" complements the literature by filling this
gap, and provides a major source of reference. It collects original country
chapters for all major European countries and contrasts the European evi
dence with experiences from most of the traditional immigration countries.
This book provides for the first time a complete evidence for Europe: How do
migrants fare and assimilate on the labor markets of the host country? How
do they affect the economic conditions of the native labor force? The
evolution of migration policies and migration flows is studied and contrasted
with the evidence in traditional immigration countries.
The new book presented and introduced here contains fresh eclectic
research from the Journal of Population Economics on the particular issue of
how migrants adjust to the labor market of the host country and how do
they and their children fare and become part of the new country's life.
Using data from the United States, Canada, many European countries,
Australia and New Zealand, the chapters study the developments of earn
ings, employment, unemployment, self-employment, occupational choices
and educational attainment after migration. The book also investigates the
role of language in labor market integration and examines the situation of
illegal, legalized and unwilling migrants. Policy effects are also studied:
Among those are the effects of selection criteria on labor market success
and the effects immigrants have on the public sector budget of the receiving
country. Hence, the book provides a broad picture of the performance of
migrants.
2. Migration and earnings
A large body of migration research deals with the earnings performance and
assimilation into the labor market of the receiving countries. A key question
studied since the seminal contribution by Chiswick (1978) is the speed of the
adjustment of immigrant earnings relative to the earnings of natives.
Typically, immigrants start with an earnings disadvantage upon arrival. In
some countries, they reach earnings' parity; in others, earnings convergence is
insufficient or non-existent. It is also of much interest how different migrants
behave in comparison with their countrymen at home, and whether return
migration biases the estimates in the earnings functions of the remaining
migrants in the host country. Part II of the book contains a fresh look at these
issues using historical data from the United Kingdom and the United States
of America, and contemporary data from Norway, Germany and New
Zealand.
Timothy J. Hatton and Roy E. Bailey study "Natives and migrants in the
London labour market, 1929-1931". While findings on more recent experi
ences suggest that migrants are often regarded as marginal workers in
metropolitan labor markets, and, hence, their earnings are lagging behind
those of the natives, the historical literature has often argued that migrants
to London in the late nineteenth and early twentieth century exhibited
advantages rather than disadvantages in earnings and the availability of
lucrative jobs. Hatton and Bailey contribute to the literature and our
understanding of migrant performance by employing a formal econometric
How do labor migrants fare? 3
analysis on data from the New Survey of London Life and Labour, a large
survey of working class households. Their research finds some evidence that
migrants performed actually well. However, the earnings advantage and the
lower incidence of unemployment associated with migrants is small. The
differences can largely be accounted for by individual characteristics and
particularly skill levels. Thus there was no discrimination on the London
labor market between migrants and non-migrants. Hatton and Bailey con
clude that there was a strong element of selectivity present among migrants
to London, which has caused a slow inflow of workers from high unem
ployment areas.
Immigrant quality is often determined in terms of earnings and the con
jecture that the erosion of migrant earnings is associated with a decline in
such quality has been a frequently studied research issue in the past decades.
This question had been posed by Borjas (1985, 1995) and is studied in this
volume by Timothy J. Hatton in his contribution "How much did immigrant
'quality' decline in late nineteenth century America?" In the early twentieth
century it was argued that recent American immigrants were less skilled and
lower motivated than the older ones. The study begins by elaborating the
parallels between immigration in the era of free migration in the years 1870-
1913 and those experiences in the last 40 years. Both periods can be seen as
phases of mass migration. Hatton constructs his data base from the cross
tabulations provided in the volumes of the Immigration Commission Reports
of the time. He estimates wage equations allowing for different effects by
nationality and for different characteristics upon arrival. These differentials
measured through the regressions are then applied to the immigrant com
position to measure the effects of the changing composition on immigrant
earnings. Hatton demonstrates a dramatic shift in the nationality composition
of the immigrants, which accounted for almost the entire decline in immigrant
wages relative to natives. Whereas immigrant quality declined due to a shift in
the composition of the migration flows, these effects are very slow compared
to those we observe in the United States today. The rhetoric of a perceived
quality decline, which was present in the public debate in America, forty years
before World War I, was hence, unjustified.
The assimilation of earnings of migrants in today's European countries is
not sufficiently studied. Pal Longva and Oddbjorn Raaum help to fill this gap
with their contribution on "Earnings assimilation of immigrants in Norway - A
reappraisal". They investigate the adjustments of earnings using the 1980 and
the 1990 Norwegian Population Census supplemented by administrative data
for 1990. The study is superior to previous investigations in that it defines
immigrant status by country of origin rather than citizenship and observe the
exact year of arrival. Their research finds considerable differences between
migrant cohorts and between the various countries of origin. Over the decade,
the earnings of the 1970-1979 cohort improved by about 6% on the average,
which is substantially lower than the 11 % which was reported in previous
research. Longva and Raaum confirm that cross-sectional estimates exagger
ate the assimilation of immigrants, but conclude that their econometric evi
dence suggests that the earnings of different cohorts actually converged from
1980 to 1990. There are distinctly different patterns for OECD and Non
OECD immigrants. While the earnings of OECD immigrants are comparable
to those of the native Norwegian population at the time of entry and remain
the same, non-OECD immigrants earn much less upon arrival but they
4 A. Constant, K. F. Zimmermann
assimilate gradually over time. The assimilation for the 1970s cohort is far too
low to create parity with natives.
Immigration typically is not a one-way street; it induces return migration
or even circular movements. This may bias the estimates of earnings func
tions, if the self-selection is markedly positive or negative depending on the
earnings potential. Amelie Constant and Douglas S. Massey study this issue in
their contribution on "Self-selection, earnings, and out-migration: a longitu
dinal study of immigrants to Germany" using data from the German Socio
economic Panel. Germany has been shown to be the major country of
immigration in Europe after Word War II, with an immigrant population size
comparable to the US in the early 1900s. Constant and Massey reveal that
emigrants are negatively selected with respect to occupational prestige and to
stable full-time employment, that there is no selectivity with respect to human
capital or gender, but that out-migration is strongly associated with the range
and nature of social attachments to Germany and the sending countries.
Although there is pronounced selection with respect to return migration, this
selective emigration does not appear to distort cross-sectional estimates of
earnings assimilation for men and women immigrants in Germany at a rel
evant level. This novel finding is derived using a longitudinal data set of 14
waves that enables the researchers to compare the earnings estimates of the
full sample in the first wave to the sample excluding the individuals emi
grating later in the panel. Constant and Massey confirm that immigrant
earnings increase with education, age, years since migration, hours of work,
and occupational prestige, and are significantly lower for females than for
males. There are differences in earnings among the immigrant nationalities,
with European Union nationals earning more than any other group.
The fifth continent has notoriously received many migrants in recent
history. In their paper "Comparing migrants to non-migrants: The Case of
Dutch migration to New Zealand", loop Hartog and Rainer Winkelmann study
the fate of one ethnic group of migrants in that area in the post World War II
period. They follow a methodological strategy advocated by Bauer, Pereira,
Vogler and Zimmermann (2002), who had used Portuguese and German data
to evaluate immigrant behavior. They proposed to merge data from both the
sending and the receiving country to be able to compare migrants to the
performance of natives in the sending and the receiving countries and to
prepare a contra-factual analysis that answers the question of whether or not
migrants would have performed better at home. For that purpose, Hartog
and Winkelmann merge Dutch and New Zealand micro data sets (including
data on Dutch immigrants to New Zealand) and compare the earnings of the
Dutch migrants to the earnings of those who had remained home in
the Netherlands and to the earnings of the New Zealanders. They find that
the migrant earnings dip in comparison with the native New Zealanders is
substantial: 15% for males and over 30% for females. The catch-up rate on
years since migration is too slow to ever really make up for the initial dif
ference. The econometric evidence further exhibits that returns to education
are somewhat higher in the Netherlands in comparison to the returns the
migrants receive in New Zealand. (However: New Zealanders in New Zea
land have a higher return than Dutch in Holland.) Dutch experience is about
equally rewarded in the Netherlands and in New Zealand, but at a substan
tially lower rate for women than for men. The returns to experience gained in
New Zealand are higher than the New Zealand returns to Dutch experience.
