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Labor Market Segmentation and the Earnings of German Guestworkers

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Author Info

  • Constant, Amelie F.

    ()
    (George Washington University, 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.

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Bibliographic Info

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:
Publication status: published in: Population Research and Policy Review, 2005, 24 (6), 5-30
Handle: RePEc:iza:izadps:dp774

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Related research

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

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  1. Zimmermann, Klaus F., 1998. "German Job Mobility and Wages," IZA Discussion Papers 4, Institute for the Study of Labor (IZA).
  2. Velling, Johannes, 1995. "Wage discrimination and occupational segregation of foreign male workers in Germany," ZEW Discussion Papers 95-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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