The Optimal Choice of a Reference Standard for Income Comparisons: Indirect Evidence from Immigrants' Return Visits
AbstractI propose two new tests of Falk and Knell’s (2004) prediction that individuals’ reference income increases with ability. To overcome the difficulty that the reference income is not observed in existing large data sets, I extend Falk and Knell’s model to establish a link between immigrants’ reference income and their return visits to their countries of origin. I derive the (arguably counter-intuitive) predictions that more educated immigrants are less likely to have returned to their country of origin for a visit, and that they are more likely to have difficulty feeling at home when they do return for a visit. Both predictions are confirmed on four waves of data from the German Socio-Economic Panel. The estimated marginal effects are statistically significant, but rather small in size.
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Bibliographic InfoPaper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 264.
Length: 21 p.
Date of creation: 2010
Date of revision:
reference standard; social comparison; immigration; Germany;
Other versions of this item:
- Stichnoth, Holger, 2009. "The optimal choice of a reference standard for income comparisons: indirect evidence from immigrants' return visits," ZEW Discussion Papers 09-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
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- Alpaslan Akay & Olivier Bargain & Klaus F. Zimmermann, 2011.
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- Alpaslan Akay & Olivier Bargain & Klaus F Zimmermann, 2011. "Relative Concerns of Rural-to-Urban Migrants in China," Working Papers 201104, School Of Economics, University College Dublin.
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