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The Careers of Immigrants

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  • Ana Damas de Matos

Abstract

I use a unique linked employer employee panel covering all wage earners in the private sector in Portugal to shed new light on the careers of immigrants. During the first ten years in the country immigrants close one third of the initial immigrant-native wage gap. I show that one third of this wage catch-up is accounted for by firm heterogeneity: Immigrants remain in the same occupations but get jobs with better paying _rms. Over time immigrants move to larger, more productive firms and with a higher share of native workers. These patterns are similar for all the recent immigrants irrespective of their origin and in particular of whether their mother tongue is the host country's language. Motivated by these new stylized facts, I suggest an economic assimilation mechanism which highlights imperfect information about immigrant productivity. I build an employer learning model with firm heterogeneity and complementarities between worker and firm type. The initial uncertainty over immigrants' productivity prevents them from getting access to the best jobs. Over time, productivity is revealed and immigrants obtain better firm matches. I derive predictions on the immigrant wage distributions over time, on their mobility patterns and on the productivity distribution of firms they are matched with. The predictions of the model are in line with the data and are not trivially derived from competing explanations.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1171.

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Date of creation: Oct 2012
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Handle: RePEc:cep:cepdps:dp1171

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

Related research

Keywords: Wage differentials; wage convergence; job mobility; immigration; linked employer-employee panel data;

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References

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  1. Pendakur, Krishna & Woodcock, Simon, 2009. "Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms," CLSSRN working papers clsrn_admin-2009-55, Vancouver School of Economics, revised 25 Oct 2009.
  2. Harriet Duleep & Daniel Dowhan, 2002. "Insights from longitudinal data on the earnings growth of U.S. foreign-born men," Demography, Springer, vol. 39(3), pages 485-506, August.
  3. Philipp Kircher & Iourii Manovski & Fane Nadja Groes, 2009. "The U-Shapes of Occupational Mobility," 2009 Meeting Papers 26, Society for Economic Dynamics.
  4. Farber, Henry S & Gibbons, Robert, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1007-47, November.
  5. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
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  7. Fredrik Andersson & Monica Garcia-Perez & John Haltiwanger & Kristin McCue & Seth Sanders, 2010. "Workplace Concentration of Immigrants," Working Papers 10-39r, Center for Economic Studies, U.S. Census Bureau, revised Nov 2011.
  8. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 1-35.
  9. Lubotsky, D., 2000. "Chutes or Ladders? A Longitudinal Analysis of Immigrant Earnings," Papers 195, Princeton, Woodrow Wilson School - Development Studies.
  10. Eckstein, Zvi & Weiss, Yoram, 2003. "On the Wage Growth of Immigrants: Israel, 1990-2000," CEPR Discussion Papers 3770, C.E.P.R. Discussion Papers.
  11. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
  12. Guimaraes, Paulo & Portugal, Pedro, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," IZA Discussion Papers 3935, Institute for the Study of Labor (IZA).
  13. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  14. Abdurrahman Aydemir & Mikal Skuterud, 2008. "The Immigrant Wage Differential within and across Establishments," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(3), pages 334-352, April.
  15. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 246-88, April.
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Cited by:
  1. Magnus Strömgren & Tiit Tammaru & Alexander Danzer & Maarten Ham & Szymon Marcińczak & Olof Stjernström & Urban Lindgren, 2014. "Factors Shaping Workplace Segregation Between Natives and Immigrants," Demography, Springer, vol. 51(2), pages 645-671, April.
  2. Panagiotis Nanos & Christian Schluter, 2013. "The Composition of Wage Differentials between Migrants and Natives," Papers 1306.1781, arXiv.org, revised Oct 2013.

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