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Immigrant-Native Differences in Earnings Mobility Processes

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  • Nisar Ahmad

    ()
    (Department of Border Region Studies, University of Southern Denmark)

  • Rayhaneh Esmaeilzadeh

    (Ministry of Community and Social Services, Canada)

  • J?rgen Hansen

    (Department of Economics, Concordia University, Canada)

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    Abstract

    This study compares the earnings mobility between immigrants and natives within and between Denmark and Canada. Both countries have different labour market conditions and immigration history which leads to an interesting comparison of earning mobility processes. The paper employs a dynamic multinomial logit model with discrete factor approximation for the specification of unobserved individual heterogeneity. The model takes into account the effect of the endogenous initial conditions problem and unobserved heterogeneity to separate structural and spurious state dependence. The results show that immigrants-native differences in earnings mobility, structural state dependence, and segmentation of earnings distribution are relatively more prominent in Denmark compared to Canada.

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    Bibliographic Info

    Article provided by Better Advances Press, Canada in its journal Review of Economics & Finance.

    Volume (Year): 4 (2014)
    Issue (Month): (Feburary)
    Pages: 13-32

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    Handle: RePEc:bap:journl:140102

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    Related research

    Keywords: Discrete Factor Approximation; Earnings Mobility Process; Immigrants and Natives; Quartile Mobility Rates; Spurious and Structural State Dependence;

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    References

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    1. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    2. Pedersen, Peder J. & Smith, Nina, 2002. "Unemployment Traps: Do Financial Dis-incentives matter?," CLS Working Papers, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research 01-1, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
    3. Victoria Prowse, 2005. "State Dependence in a Multi-state Model of Employment Dynamics," Economics Series Working Papers, University of Oxford, Department of Economics 2005-W20, University of Oxford, Department of Economics.
    4. Stewart, Mark, 2006. "The Inter-related Dynamics of Unemployment and Low-Wage Employment," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 741, University of Warwick, Department of Economics.
    5. Blume, Kraen & Verner, Mette, 2007. "Welfare dependency among Danish immigrants," European Journal of Political Economy, Elsevier, Elsevier, vol. 23(2), pages 453-471, June.
    6. Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, Elsevier, vol. 92(2), pages 233-274, October.
    7. Charles M. Beach & Ross Finnie, 2001. "Cyclical Changes in Short-Run Earnings Mobility in Canada, 1982-1996," The State of Economics in Canada: Festschrift in Honour of David Slater, Centre for the Study of Living Standards, in: Patrick Grady & Andrew Sharpe (ed.), The State of Economics in Canada: Festschrift in Honour of David Slater, pages 453-484 Centre for the Study of Living Standards.
    8. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 52(1), pages 24-50, January.
    9. Thomas Liebig, 2007. "The Labour Market Integration of Immigrants in Denmark," OECD Social, Employment and Migration Working Papers, OECD Publishing 50, OECD Publishing.
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