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Economic Assimilation of Foreign-Born Workers in the United States: An Overlapping Rotating Panel Analysis

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  • Seik Kim
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Abstract

This paper presents new evidence on whether foreign-born workers assimilate, which we define as the degree to which the wages of foreign-born workers approach those of comparable native-born workers with additional time spent in the United States. The key econometric challenge is to separate wage growth due to assimilation from composition effects. The composition of immigrant population varies over time due to variation in initial skill levels at year of entry and also because of selective return migration. While much of the existing literature relies on cross-section data, we use longitudinal data on native-born and foreign-born populations which allows us to control for initial skill composition. An advantage of using the Current Population Survey (CPS) is that one can construct cross-section samples by ignoring its longitudinal structure. We compare cross-section and panel models of foreign-native gap in wage growth, and the results suggest that analyses based on repeated cross-section studies are biased upward by fixed unobserved heterogeneity. Controlling for this heterogeneity reverses the conventional result of economic assimilation. Overall, we find little evidence of a narrowing of the foreign-native gap in economic performance. New immigrants from Central and South America earn lower wages than natives, and this gap widens with time in the U.S. labor market. The wages of new immigrants from Europe and Asia exceed those of natives and there is no strong evidence of convergence. We account for sample attrition in the presence of nonrandom outmigration and find that our results are robust to panel attrition.

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Bibliographic Info

Paper provided by University of Washington, Department of Economics in its series Working Papers with number UWEC-2008-19.

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Handle: RePEc:udb:wpaper:uwec-2008-19

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  1. Borjas, George J & Bratsberg, Bernt, 1996. "Who Leaves? The Outmigration of the Foreign-Born," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 165-76, February.
  2. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
  3. Güell, Maia & Hu, Luojia, 2003. "Estimating the Probability of Leaving Unemployment Using Uncompleted Spells from Repeated Cross-Section Data," CEPR Discussion Papers 3957, C.E.P.R. Discussion Papers.
  4. Guillermina Jasso & Mark Rosenzweig, 1982. "Estimating the emigration rates of legal immigrants using administrative and survey data: The 1971 cohort of immigrants to the United States," Demography, Springer, vol. 19(3), pages 279-290, August.
  5. Bollinger, Christopher R. & Hirsch, Barry, 2005. "Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching," IZA Discussion Papers 1846, Institute for the Study of Labor (IZA).
  6. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
  7. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
  8. Baker, Michael & Benjamin, Dwayne, 1997. "The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 87(4), pages 705-27, September.
  9. Darren Lubotsky, 2000. "Chutes or Ladders? A Longitudinal Analysis of Immigrant Earnings," Labor and Demography 0004006, EconWPA.
  10. Wei-Yin Hu, 2000. "Immigrant Earnings Assimilation: Estimates from Longitudinal Data," American Economic Review, American Economic Association, vol. 90(2), pages 368-372, May.
  11. George J. Borjas, 1994. "Assimilation and Changes in Cohort Quality Revisited: What Happened to Immigrant Earnings in the 1980s?," NBER Working Papers 4866, National Bureau of Economic Research, Inc.
  12. Keisuke Hirano & Guido W. Imbens & Geert Ridder & Donald B. Rebin, 1998. "Combining Panel Data Sets with Attrition and Refreshment Samples," NBER Technical Working Papers 0230, National Bureau of Economic Research, Inc.
  13. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
  14. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  15. Guillermina Jasso & Mark R. Rosenzweig & James P. Smith, 1998. "The Changing Skills of New Immigrants to the United States: Recent Trends and Their Determinants," NBER Working Papers 6764, National Bureau of Economic Research, Inc.
  16. Robert J. LaLonde & Robert H. Topel, 1990. "The Assimilation of Immigrants in the U.S. Labor Markets," NBER Working Papers 3573, National Bureau of Economic Research, Inc.
  17. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
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  22. Marco Manacorda, 2004. "Can the Scala Mobile Explain the Fall and Rise of Earnings Inequality in Italy? A Semiparametric Analysis, 19771993," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 585-614, July.
  23. Seik Kim, . "Sample Attrition in the Presence of Population Attrition," Working Papers UWEC-2009-02, University of Washington, Department of Economics.
  24. Chunrong Ai & Xiaohong Chen, 2003. "Efficient Estimation of Models with Conditional Moment Restrictions Containing Unknown Functions," Econometrica, Econometric Society, vol. 71(6), pages 1795-1843, November.
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  27. repec:bla:restud:v:72:y:2005:i:2:p:343-366 is not listed on IDEAS
  28. David Neumark & William Wascher, 1995. "The Effects of Minimum Wages on Teenage Employment and Enrollment: Evidence from Matched CPS Surveys," NBER Working Papers 5092, National Bureau of Economic Research, Inc.
  29. Barth, Erling & Bratsberg, Bernt & Raaum, Oddbjørn, 2003. "Local Unemployment and the Relative Wages of Immigrants: Evidence from the Current Population Surveys," Memorandum 20/2002, Oslo University, Department of Economics.
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  31. 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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Citations

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Cited by:
  1. Seik Kim, 2013. "Wage Mobility of Foreign-Born Workers in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 48(3), pages 628-658.
  2. Neagu, Ileana Cristina, 2009. "Career placement of skilled migrants in the U.S. labor market : a dynamic approach," Policy Research Working Paper Series 4891, The World Bank.
  3. Seik Kim, . "Sample Attrition in the Presence of Population Attrition," Working Papers UWEC-2009-02, University of Washington, Department of Economics.
  4. Mattoo, Aaditya & Neagu, Ileana Cristina & Ozden, Caglar, 2012. "Performance of skilled migrants in the U.S. : a dynamic approach," Policy Research Working Paper Series 6140, The World Bank.
  5. Seik Kim & Nalina Varanasi, . "Labor Supply of Married Women in Credit-Constrained Households: Theory and Evidence," Working Papers UWEC-2010-01, University of Washington, Department of Economics.
  6. Christian Dustmann, 2014. "Selective Outmigration and the Estimation of Immigrants Earnings Profiles," CReAM Discussion Paper Series 1402, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  7. de Walque, Damien, 2008. "Race, immigration, and the U.S. labor marke t: contrasting the outcomes of foreign born and native blacks," Policy Research Working Paper Series 4737, The World Bank.

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