IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp13740.html
   My bibliography  Save this paper

The Role of Unemployment and Job Change When Estimating the Returns to Migration

Author

Listed:
  • Emmler, Julian

    (Humboldt University Berlin)

  • Fitzenberger, Bernd

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Estimating the returns to migration from East to West Germany, we focus on pre-migration employment dynamics, earnings uncertainty, and job change. Migrants are found to be negatively selected with respect to labor market outcomes, with a large drop in earnings and employment during the last few months before migration. We find sizeable positive earnings and employment gains of migration both in comparison to staying or job change. The gains vary considerably with pre-migration earnings and with the counterfactual considered. Future migrants have worse expectations for their labor market prospects in the East and migrants show a greater openness to mobility.

Suggested Citation

  • Emmler, Julian & Fitzenberger, Bernd, 2020. "The Role of Unemployment and Job Change When Estimating the Returns to Migration," IZA Discussion Papers 13740, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13740
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp13740.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Liepmann, Hannah, 2018. "The impact of a negative labor demand shock on fertility – Evidence from the fall of the Berlin Wall," Labour Economics, Elsevier, vol. 54(C), pages 210-224.
    2. Fitzenberger, Bernd & Sommerfeld, Katrin & Steffes, Susanne, 2013. "Causal effects on employment after first birth — A dynamic treatment approach," Labour Economics, Elsevier, vol. 25(C), pages 49-62.
    3. Martin Biewen & Bernd Fitzenberger & Aderonke Osikominu & Marie Paul, 2014. "The Effectiveness of Public-Sponsored Training Revisited: The Importance of Data and Methodological Choices," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 837-897.
    4. Alan B. Krueger & Jorn-Steffen Pischke, 1995. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Chapters, in: Differences and Changes in Wage Structures, pages 405-446, National Bureau of Economic Research, Inc.
    5. Matthias Parey & Jens Ruhose & Fabian Waldinger & Nicolai Netz, 2017. "The Selection of High-Skilled Emigrants," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 776-792, December.
    6. Heckman, James J. & Navarro, Salvador, 2007. "Dynamic discrete choice and dynamic treatment effects," Journal of Econometrics, Elsevier, vol. 136(2), pages 341-396, February.
    7. Matias Busso & John DiNardo & Justin McCrary, 2014. "New Evidence on the Finite Sample Properties of Propensity Score Reweighting and Matching Estimators," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 885-897, December.
    8. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 106-142.
    9. Daniel Fackler & Lisa Rippe, 2017. "Losing Work, Moving Away? Regional Mobility After Job Loss," LABOUR, CEIS, vol. 31(4), pages 457-479, December.
    10. Florian Lehmer & Johannes Ludsteck, 2011. "The returns to job mobility and inter‐regional migration: Evidence from Germany," Papers in Regional Science, Wiley Blackwell, vol. 90(3), pages 549-571, August.
    11. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
    12. Zaiceva, Anzelika, 2010. "East-West migration and gender: Is there a differential effect for migrant women?," Labour Economics, Elsevier, vol. 17(2), pages 443-454, April.
    13. Burda, Michael C, 1995. "Migration and the Option Value of Waiting," CEPR Discussion Papers 1229, C.E.P.R. Discussion Papers.
    14. Barbara Sianesi, 2004. "An Evaluation of the Swedish System of Active Labor Market Programs in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 133-155, February.
    15. Robert Orlowski & Regina T. Riphahn, 2008. "The East German Wage Structure after Transition," SOEPpapers on Multidisciplinary Panel Data Research 148, DIW Berlin, The German Socio-Economic Panel (SOEP).
    16. Burda, Michael C., 1993. "The determinants of East-West German migration: Some first results," European Economic Review, Elsevier, vol. 37(2-3), pages 452-461, April.
    17. David McKenzie & John Gibson & Steven Stillman, 2010. "How Important Is Selection? Experimental vs. Non-Experimental Measures of the Income Gains from Migration," Journal of the European Economic Association, MIT Press, vol. 8(4), pages 913-945, June.
    18. Michael Amior, 2015. "Why are Higher Skilled Workers More Mobile Geographically? The Role of the Job Surplus," CEP Discussion Papers dp1338, Centre for Economic Performance, LSE.
    19. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, vol. 79(1), pages 211-251, January.
    20. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 327-439, Elsevier.
    21. Zaiceva, Anzelika, 2006. "Self-Selection and the Returns to Geographic Mobility: What Can Be Learned from the German Reunification "Experiment"," IZA Discussion Papers 2524, Institute of Labor Economics (IZA).
    22. Snower, Dennis J. & Merkl, Christian, 2006. "The caring hand that cripples: The East German labor market after reunification (detailed version)," Kiel Working Papers 1263, Kiel Institute for the World Economy (IfW Kiel).
    23. David A. Jaeger & Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Holger Bonin, 2010. "Direct Evidence on Risk Attitudes and Migration," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 684-689, August.
    24. Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2010. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 103-132, January.
    25. Daniel Chiquiar & Gordon H. Hanson, 2005. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 239-281, April.
    26. Pissarides, Christopher A & Wadsworth, Jonathan, 1989. "Unemployment and the Inter-regional Mobility of Labour," Economic Journal, Royal Economic Society, vol. 99(397), pages 739-755, September.
    27. Robert Nakosteen & Olle Westerlund, 2004. "The effects of regional migration on gross income of labour in Sweden," Economics of Governance, Springer, vol. 83(3), pages 581-595, July.
    28. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
    29. Robert Kaestner & Ofer Malamud, 2014. "Self-Selection and International Migration: New Evidence from Mexico," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 78-91, March.
    30. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2013. "The performance of estimators based on the propensity score," Journal of Econometrics, Elsevier, vol. 175(1), pages 1-21.
    31. Sebastian Heise & Tommaso Porzio, 2019. "Spatial Wage Gaps in Frictional Labor Markets," Opportunity and Inclusive Growth Institute Working Papers 29, Federal Reserve Bank of Minneapolis.
    32. Jeffrey J. Yankow, 2003. "Migration, Job Change, and Wage Growth: A New Perspective on the Pecuniary Return to Geographic Mobility," Journal of Regional Science, Wiley Blackwell, vol. 43(3), pages 483-516, August.
    33. Lkhagvasuren, Damba, 2014. "Education, mobility and the college wage premium," European Economic Review, Elsevier, vol. 67(C), pages 159-173.
    34. Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 375-382, May.
    35. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    36. Heckman, James J & Smith, Jeffrey A, 1999. "The Pre-programme Earnings Dip and the Determinants of Participation in a Social Programme. Implications for Simple Programme Evaluation Strategies," Economic Journal, Royal Economic Society, vol. 109(457), pages 313-348, July.
    37. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    38. Freeman, Richard B. & Katz, Lawrence F. (ed.), 1995. "Differences and Changes in Wage Structures," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261607, December.
    39. Alwyn Young, 2013. "Inequality, the Urban-Rural Gap, and Migration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1727-1785.
    40. Viktor A. Venhorst & Frank Cörvers, 2018. "Entry into working life: Internal migration and the job match quality of higher†educated graduates," Journal of Regional Science, Wiley Blackwell, vol. 58(1), pages 116-140, January.
    41. Abigail Wozniak, 2010. "Are College Graduates More Responsive to Distant Labor Market Opportunities?," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 944-970.
    42. Kristiina Huttunen & Jarle Møen & Kjell G. Salvanes, 2018. "Job Loss and Regional Mobility," Journal of Labor Economics, University of Chicago Press, vol. 36(2), pages 479-509.
    43. Melanie Arntz & Terry Gregory & Florian Lehmer, 2014. "Can Regional Employment Disparities Explain the Allocation of Human Capital Across Space?," Regional Studies, Taylor & Francis Journals, vol. 48(10), pages 1719-1738, October.
    44. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    45. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
    46. De la Roca, Jorge, 2017. "Selection in initial and return migration: Evidence from moves across Spanish cities," Journal of Urban Economics, Elsevier, vol. 100(C), pages 33-53.
    47. Jennifer Hunt, 2006. "Staunching Emigration from East Germany: Age and the Determinants of Migration," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 1014-1037, September.
    48. Ham, John C. & Li, Xianghong & Reagan, Patricia B., 2011. "Matching and semi-parametric IV estimation, a distance-based measure of migration, and the wages of young men," Journal of Econometrics, Elsevier, vol. 161(2), pages 208-227, April.
    49. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
    50. Jurajda, Stepan & Harmgart, Heike, 2007. "When do female occupations pay more?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 170-187, March.
    51. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    52. W. Smolny & M. Kirbach, 2011. "Wage differentials between East and West Germany: are they related to the location or to the people?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(9), pages 873-879.
    53. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, March.
    54. Robert Orlowski & Regina T. Riphahn, 2009. "The East German wage structure after transition1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(4), pages 629-659, October.
    55. Cristian Bartolucci & Claudia Villosio & Mathis Wagner, 2018. "Who Migrates and Why? Evidence from Italian Administrative Data," Journal of Labor Economics, University of Chicago Press, vol. 36(2), pages 551-588.
    56. Heinz Vortmann & Jan Goebel & Peter Krause & Gert G. Wagner, 2013. "Zur Entwicklung der Preisniveaus in Ost- und Westdeutschland: zugleich eine Dokumentation verschiedener Preisniveau-Zeitreihen für das geteilte und für das vereinigte Deutschland," Discussion Papers of DIW Berlin 1269, DIW Berlin, German Institute for Economic Research.
    57. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    58. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
    59. Bound, John & Holzer, Harry J, 2000. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 20-54, January.
    60. Tunali, Insan, 2000. "Rationality of Migration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 893-920, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yvonne Giesing & Björn Kauder & Lukas Mergele & Niklas Potrafke & Panu Poutvaara, 2024. "Moving Out of the Comfort Zone: How Cultural Norms Affect Attitudes toward Immigration," CESifo Working Paper Series 10985, CESifo.
    2. Marco Caliendo & Steffen Künn & Robert Mahlstedt, 2022. "The Intended and Unintended Effects of Promoting Labor Market Mobility," CEPA Discussion Papers 42, Center for Economic Policy Analysis.
    3. Alasalmi, Juho, 2023. "Self-selection of Job-to-job Migrants on Match Quality," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277633, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emmler, Julian & Fitzenberger, Bernd, 2020. "The role of unemployment and job change when estimating the returns to migration," IAB-Discussion Paper 202037, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61.
    3. Zaiceva, Anzelika, 2006. "Self-Selection and the Returns to Geographic Mobility: What Can Be Learned from the German Reunification "Experiment"," IZA Discussion Papers 2524, Institute of Labor Economics (IZA).
    4. Robert Orlowski & Regina T. Riphahn, 2008. "The East German Wage Structure after Transition," SOEPpapers on Multidisciplinary Panel Data Research 148, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Karsten Kohn & Dirk Antonczyk, 2013. "The aftermath of reunification," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(1), pages 73-110, January.
    6. Caliendo, Marco & Künn, Steffen & Mahlstedt, Robert, 2017. "Mobility Assistance Programmes for Unemployed Workers, Job Search Behaviour and Labour Market Outcomes," IZA Discussion Papers 11169, Institute of Labor Economics (IZA).
    7. Sebastian Heise & Tommaso Porzio, 2019. "Spatial Wage Gaps and Frictional Labor Markets," Staff Reports 898, Federal Reserve Bank of New York.
    8. Alasalmi, Juho, 2023. "Self-selection of Job-to-job Migrants on Match Quality," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277633, Verein für Socialpolitik / German Economic Association.
    9. Jennifer Hunt, 2004. "Are migrants more skilled than non-migrants? Repeat, return, and same-employer migrants," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 830-849, November.
    10. Kohn, Karsten & Antonczyk, Dirk, 2011. "The Aftermath of Reunification: Sectoral Transition, Gender, and Rising Wage Inequality in East Germany," IZA Discussion Papers 5708, Institute of Labor Economics (IZA).
    11. De la Roca, Jorge, 2017. "Selection in initial and return migration: Evidence from moves across Spanish cities," Journal of Urban Economics, Elsevier, vol. 100(C), pages 33-53.
    12. Ong, Qiyan & Theseira, Walter, 2016. "Does choosing jobs based on income risk lead to higher job satisfaction in the long run? Evidence from the natural experiment of German reunification," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 95-108.
    13. Caliendo, Marco & Mahlstedt, Robert & Mitnik, Oscar A., 2017. "Unobservable, but unimportant? The relevance of usually unobserved variables for the evaluation of labor market policies," Labour Economics, Elsevier, vol. 46(C), pages 14-25.
    14. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    15. Ning Jia & Raven Molloy & Christopher Smith & Abigail Wozniak, 2023. "The Economics of Internal Migration: Advances and Policy Questions," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 144-180, March.
    16. Kuehn, Zoe, 2014. "The rise or the fall of the wall? Determinants of low entrepreneurship in East Germany," Working Papers in Economic Theory 2014/03, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    17. Mario Liebensteiner, 2014. "Estimating the Income Gain of Seasonal Labor Migration," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 667-680, November.
    18. Blien Uwe & Möller Joachim & Hong Van Phan thi & Brunow Stephan, 2016. "Long-Lasting Labour Market Consequences of German Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 181-216, March.
    19. Orsa Kekezi & Ron Boschma, 2021. "Returns to migration after job loss—The importance of job match," Environment and Planning A, , vol. 53(6), pages 1565-1587, September.
    20. Kim, Jun Sung & Lee, Jongkwan, 2019. "The role of intergenerational mobility in internal migration," Economic Modelling, Elsevier, vol. 81(C), pages 1-15.

    More about this item

    Keywords

    migration; returns; selection; unemployment; moving costs;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp13740. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.