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Labor Market Segmentation and the Earnings of German Guestworkers

Author

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  • Constant, Amelie F.

    (Temple University)

  • Massey, Douglas S.

    (Princeton University)

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.

Suggested Citation

  • Constant, Amelie F. & Massey, Douglas S., 2003. "Labor Market Segmentation and the Earnings of German Guestworkers," IZA Discussion Papers 774, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp774
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    References listed on IDEAS

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    1. Klaus F. Zimmermann, 1998. "German Job Mobility and Wages," Palgrave Macmillan Books, in: Isao Ohashi & Toshiaki Tachibanaki (ed.), Internal Labour Markets, Incentives and Employment, chapter 12, pages 300-332, Palgrave Macmillan.
    2. Eyraud, Francois & Marsden, David & Silvestre, Jean-Jacques, 1990. "Occupational and internal labour markets in Britain and France," LSE Research Online Documents on Economics 21305, London School of Economics and Political Science, LSE Library.
    3. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, March.
    4. Ganzeboom, H.B.G. & de Graaf, P.M. & Treiman, D.J. & de Leeuw, J., 1992. "A standard international socio-economic index of occupational status," WORC Paper 92.01.001/1, Tilburg University, Work and Organization Research Centre.
    5. Velling, Johannes, 1995. "Wage discrimination and occupational segregation of foreign male workers in Germany," ZEW Discussion Papers 95-04, ZEW - Leibniz Centre for European Economic Research.
    6. David Marsden, 1990. "Institutions and Labour Mobility: Occupational and Internal Labour Markets in Britain, France, Italy and West Germany," International Economic Association Series, in: Renato Brunetta & Carlo Dell’Aringa (ed.), Labour Relations and Economic Performance, chapter 17, pages 414-438, Palgrave Macmillan.
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    More about this item

    Keywords

    labor market segmentation; human capital; earnings assimilation; occupational achievement; international migration;
    All these keywords.

    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, Vacancies, and Immigrant Workers
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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