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The immigrant-native gap in risk and time preferences in Germany: levels, socio-economic determinants, and recent changes

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  • Sumit S. Deole

    (University of Trier)

  • Marc Oliver Rieger

    (University of Trier)

Abstract

We present new descriptive evidence on the immigrant-native gap in risk and time preferences in Germany, one of immigrants’ most preferred destination countries. Using the recent waves of the Socio-Economic Panel (SOEP) dataset, we find that the immigrant-native gap in risk preferences has widened for recent immigration cohorts, especially around the time of the 2015 European Refugee Crisis. We attribute the recent widening to decreased assimilation rates of new immigrants caused by reduced integration due to sudden increases in immigrants flows from culturally diverse parts of the world, particularly around the year 2015. We also find that the immigrant-native gap varies across different migrant groups: “Opportunity seekers,” which we define as economic immigrants who intend to stay in Germany only temporarily, are very similar in their risk preferences to natives. Other immigrants, however, are substantially more risk averse than natives. A smaller gap in risk preferences is also found among migrants who are female, highly educated, proficient in the host language, self-employed, and working in predominantly high-skilled jobs. Concerning time preferences, a noticeably large immigrant-native gap is evident, but the gap does not vary across most individual-level socio-economic variables.

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  • Sumit S. Deole & Marc Oliver Rieger, 2023. "The immigrant-native gap in risk and time preferences in Germany: levels, socio-economic determinants, and recent changes," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 743-778, April.
  • Handle: RePEc:spr:jopoec:v:36:y:2023:i:2:d:10.1007_s00148-022-00925-x
    DOI: 10.1007/s00148-022-00925-x
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    Cited by:

    1. Zhan, Crystal & Deole, Sumit, 2022. "Economic Preferences and the Self-selection of Immigrants," GLO Discussion Paper Series 1156, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Risk aversion; Time discounting; Immigration; Assimilation;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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