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Labor Market Segmentation and the Earnings of German Guestworkers

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Author Info
Constant, Amelie () (University of Pennsylvania and IZA Bonn)
Massey, Douglas S. (University of Pennsylvania)

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Abstract

In this paper we study the occupational progress and earnings attainment of immigrants in Germany over time and compare them to native Germans. Our analysis is guided by the human capital and segmented labor market theories. To assess the separate effects of occupational segmentation and discrimination in the allocation of occupations and wages we conceptualize the process of earnings attainment as occurring in three stages: initial occupational achievement, final occupational achievement after the accumulation of experience, and contingent on the former, final earnings attainment. Using data from the German Socioeconomic Panel, our results indicate a high degree of initial occupational segmentation, with immigrants being less able to translate their human capital into a good first job and being channeled into first occupations of significantly lower status than natives. We also developed evidence to suggest that immigrants experienced significant discrimination in the process of occupational attainment, yielding little job mobility over time, and widening the status gap between Germans and guestworkers. Holding occupational status constant, however, we found less evidence of direct discrimination in the process of earnings attainment. Although immigrants achieved lower rates of return to technical or vocational training than natives, their wage returns to experience, hours worked, years since migration, and academic high school were greater, yielding significant earnings mobility over time.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 774.

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Length: 27 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:iza:izadps:dp774

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Related research
Keywords: occupational achievement; earnings assimilation; human capital; labor market segmentation; international migration;

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Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J4 - Labor and Demographic Economics - - Particular Labor Markets
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
J7 - Labor and Demographic Economics - - Labor Discrimination

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Zimmermann, Klaus F., 1998. "German Job Mobility and Wages," IZA Discussion Papers 04, Institute for the Study of Labor (IZA). [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sebastian Gundel & Heiko Peters, 2007. "Assimilation and Cohort Effects for German Immigrants," SOEPpapers 64, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  2. Stephan O. Hornig & Horst Rottmann & Rüdiger Wapler, 2009. "Information Asymmetry, Education Signals and the Case of Ethnic and Native Germans," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Hipólito Simón & Esteban Sanromá & Raúl Ramos, 2008. "Labour segregation and immigrant and native-born wage distributions in Spain: an analysis using matched employer–employee data," Spanish Economic Review, Springer, vol. 10(2), pages 135-168, June. [Downloadable!] (restricted)
  4. Thomsen, Stephan L. & Gernandt, Johannes & Aldashev, Alisher, 2008. "The Immigrant Wage Gap in Germany," ZEW Discussion Papers 08-089, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  5. Nadja Milewski, 2007. "First child of immigrant workers and their descendants in West Germany," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 17(29), pages 859-896, December. [Downloadable!]
  6. Constant, Amelie & Kahanec, Martin & Zimmermann, Klaus F, 2006. "The Russian-Ukrainian Earnings Divide," CEPR Discussion Papers 5904, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Thomsen, Stephan L. & Gernandt, Johannes & Aldashev, Alisher, 2007. "Earnings Prospects for People with Migration Background in Germany," ZEW Discussion Papers 07-031 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  8. Jana Bruder & Katharina Frosch, 2006. "Foreign Nationality and Age - A Double Drawback for Reemployment in Germany?," Thuenen-Series of Applied Economic Theory 63, University of Rostock, Institute of Economics, Germany. [Downloadable!]
  9. DeVoretz, Don J., 2004. "Immigration Policy: Methods of Economic Assessment," IZA Discussion Papers 1217, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Danzer, Alexander M. & Ulku, Hulya, 2008. "Determinants of Integration and its Impact on the Economic Success of Immigrants: A Case Study of the Turkish Community in Berlin," IZA Discussion Papers 3762, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  11. Robert Elliott & Joanne Kathryn Lindley, 2006. "Immigrant Wage Differentials, Ethnicity and Occupational Clustering," Working Papers 2006008, The University of Sheffield, Department of Economics, revised May 2006. [Downloadable!]
  12. Constant, Amelie & Zimmermann, Klaus F, 2004. "Occupational Choice Across Generations," CEPR Discussion Papers 4258, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Peter Egger & Stefan Gruber & Mario Larch & Michael Pfaffermayr, 2007. "Knowledge–capital meets new economic geography," The Annals of Regional Science, Springer, vol. 41(4), pages 857-875, December. [Downloadable!] (restricted)
    Other versions:
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