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Immigration, Search and Loss of Skill

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  • Weiss, Yoram
  • Sauer, Robert M.
  • Gotlibovski, Menachem

Abstract

This paper analyzes the process of entry into the Israeli labor market among a panel of highly skilled immigrants who moved from the former USSR to Israel. We estimate a nonstationary, finite horizon search model with exogenous wage growth that is capable of capturing the main features of this process; a speedy entry into the labor force, an initial phase of work at low skill occupations, a gradual occupational upgrading and a sharp increase in wages. The estimated parameters of the model, together with information on the wages of immigrants from earlier waves, allow us to predict an occupational path and associated wages, for each new immigrant, from the time of arrival until retirement. We compare predicted lifetime earnings at the time of arrival to the hypothetical lifetime earnings immigrants would have received had their imported observable skills been valued in the same way as comparable Israelis. We estimate that, on the average, immigrants can expect lifetime earnings to fall short of the lifetime earnings of comparable Israelis by 42.6 percent. Of this figure, 8.3 percentage points reflect frictions associated with unemployment and occupational mismatch and 34.3 percentage points reflect the gradual adaptation of imported schooling and experience to the local labor market.

Suggested Citation

  • Weiss, Yoram & Sauer, Robert M. & Gotlibovski, Menachem, 1999. "Immigration, Search and Loss of Skill," Foerder Institute for Economic Research Working Papers 275638, Tel-Aviv University > Foerder Institute for Economic Research.
  • Handle: RePEc:ags:isfiwp:275638
    DOI: 10.22004/ag.econ.275638
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Economics; International Relations/Trade;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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