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Education, Training and Economic Performance: Evidence from Establishment Survival Data

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  • William Collier

    ()

  • Francis Green

    ()

  • Young-Bae Kim
  • John Peirson

    ()

Abstract

This paper analyses the savings behaviour of natives and immigrants in Germany. It is argued that uncertainty about future income and legal status (in case of immigrants) is a key component in the determination of the level of precautionary savings. Using the German dataset, we exploit a natural experiment arising from a change in the nationality law in Germany to estimate the importance of precautionary savings. Using difference-in-differences approach, we find a significant reduction in savings and remittances for immigrants after the easing of citizenship requirements, compared to the pre-reform period. Our parametric specification shows that introduction of the new nationality law reduces the marginal propensity to save gap between natives and immigrants by up to 80%. These findings suggest that much of the differences in terms of the savings behaviour between natives and immigrants are driven by the savings arising from the uncertainties about future income and legal status rather than cultural differences.

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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0822.

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Date of creation: Dec 2008
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Handle: RePEc:ukc:ukcedp:0822

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Keywords: Training; Education; Human capital; Profit; Skill;

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