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The Self Selection of Migrant Workers Revisited

  • Eran Yashiv

Work of low-skilled migrant workers from developing countries in developed economies is a growingphenomenon and a key political and economic issue. An extensive literature has found (for the mostpart) that these workers come from the lower part of the skill distribution. This paper revisits theissue, using a self-selection model, a unique data-set on migrant workers as well as on workers thatchose not to migrate ('stayers'), and direct estimation of the moments of the latent unobserved skilldistributions. The main findings are that there are two dimensions to self-selection: in terms ofobserved skills, a substantial migration premium lures migrant workers, while very low returns toskills in the foreign economy deter skilled workers, leading to negative self-selection. In terms ofunobservable skills, self-selection is found to be positive rather than negative. The latter findingentails substantial increases in mean wages and reduction in wage inequality, relative to randomassignment and to the alternative of not migrating. The analysis also demonstrates that estimates ofskill premia for migrants — an important issue in the immigration literature — are upward biased ifselection is not accounted for. Relevant skills are multi-dimensional, hence assignments in thiscontext are non-hierarchical.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0655.

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Date of creation: Oct 2004
Date of revision:
Handle: RePEc:cep:cepdps:dp0655
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  1. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October.
  2. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier.
  3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  4. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September.
  5. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
  6. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
  7. repec:ilo:ilowps:338944 is not listed on IDEAS
  8. Christian Dustmann & Costas Meghir, 2001. "Wages, experience and seniority," IFS Working Papers W01/01, Institute for Fiscal Studies.
  9. Joshua D. Angrist, 1995. "Short-Run Demand for Palestinian Labor," Working papers 95-16, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Klaus Zimmermann, 2007. "The economics of migrant ethnicity," Journal of Population Economics, Springer, vol. 20(3), pages 487-494, July.
  11. Rosen, Sherwin, 1978. "Substitution and Division of Labour," Economica, London School of Economics and Political Science, vol. 45(179), pages 235-50, August.
  12. Cohen-Goldner, Sarit & Eckstein, Zvi, 2002. "Labour Mobility of Immigrants: Training, Experience, Language and Opportunities," CEPR Discussion Papers 3412, C.E.P.R. Discussion Papers.
  13. Eli Berman & Zaur Rzakhanov, 2000. "Fertility, Migration, and Altruism," NBER Working Papers 7545, National Bureau of Economic Research, Inc.
  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. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  16. Heckman, James J & Sedlacek, Guilherme L, 1990. "Self-selection and the Distribution of Hourly Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S329-63, January.
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