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Does Better Pre-Migration Performance Accelerate Immigrants' Wage Assimilation?

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Author Info

  • Hirsch, Boris

    ()
    (University of Erlangen-Nuremberg)

  • Jahn, Elke J.

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Toomet, Ott

    ()
    (University of Tartu)

  • Hochfellner, Daniela

    ()
    (Institute for Employment Research (IAB), Nuremberg)

Abstract

This paper analyzes wage assimilation of ethnic German immigrants to Germany. We use unique administrative data that include a standardized measure of immigrants' pre-migration wage based on occupation, industry, tenure, qualification, and the German wage structure. We find that immigrants experience a substantial initial wage disadvantage compared to natives. During their first 15 years in the host country they manage to close a considerable part of this gap, though assimilation is only partial. A 10% higher pre-migration wage translates into a 1.6% higher wage in Germany when also controlling for educational attainment, thus pointing at partial transferability of human capital acquired in the source country to the host country's labor market. We also find that wage assimilation is significantly accelerated for immigrants with a higher pre-migration wage. Our results are in line with strong complementarities between general skills and host country-specific human capital, in particular proficiency in the host country's language.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7240.

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Length: 37 pages
Date of creation: Feb 2013
Date of revision:
Publication status: forthcoming in: Labour Economics, 2014
Handle: RePEc:iza:izadps:dp7240

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Keywords: migration; labor market assimilation; ethnic Germans; transferability of human capital;

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  1. Esteban Sanromà & Raúl Ramos & Hipólito Simón, 2009. "Immigrant wages in the Spanish labour market: does the origin of human capital matter?," Working Papers 2009/8, Institut d'Economia de Barcelona (IEB).
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  9. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
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  11. Constant, Amelie F. & Massey, Douglas S., 2002. "Self-Selection, Earnings, and Out-Migration: A Longitudinal Study of Immigrants to Germany," IZA Discussion Papers 672, Institute for the Study of Labor (IZA).
  12. Fitzenberger, Bernd & Osikominu, Aderonke & Völter, Robert, 2005. "Imputation Rules to Improve the Education Variable in the IAB Employment Subsample," ZEW Discussion Papers 05-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Barry R. Chiswick & Paul W. Miller, 1999. "Immigrant Earnings: Language Skills, Linguistic Concentrations and the Business Cycle," University of Chicago - George G. Stigler Center for Study of Economy and State 152, Chicago - Center for Study of Economy and State.
  14. Pendakur, Krishna & Woodcock, Simon D., 2009. "Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms," IZA Discussion Papers 4626, Institute for the Study of Labor (IZA).
  15. Bernt Bratsberg & James F. Ragan Jr., 2002. "The Impact of Host-Country Schooling on Earnings: A Study of Male Immigrants in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 63-105.
  16. Joseph Schaafsma & Arthur Sweetman, 2001. "Immigrant earnings: age at immigration matters," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 1066-1099, November.
  17. Robert F. Schoeni, 1997. "New Evidence on the Economic Progress of Foreign-Born Men in the 1970s and 1980s," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 683-740.
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