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The Careers of Immigrants

  • Ana Damas de Matos

I use a unique linked employer employee panel covering all wage earners in the private sector in Portugal to shed new light on the careers of immigrants. During the first ten years in the country immigrants close one third of the initial immigrant-native wage gap. I show that one third of this wage catch-up is accounted for by firm heterogeneity: Immigrants remain in the same occupations but get jobs with better paying _rms. Over time immigrants move to larger, more productive firms and with a higher share of native workers. These patterns are similar for all the recent immigrants irrespective of their origin and in particular of whether their mother tongue is the host country's language. Motivated by these new stylized facts, I suggest an economic assimilation mechanism which highlights imperfect information about immigrant productivity. I build an employer learning model with firm heterogeneity and complementarities between worker and firm type. The initial uncertainty over immigrants' productivity prevents them from getting access to the best jobs. Over time, productivity is revealed and immigrants obtain better firm matches. I derive predictions on the immigrant wage distributions over time, on their mobility patterns and on the productivity distribution of firms they are matched with. The predictions of the model are in line with the data and are not trivially derived from competing explanations.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1171.

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Date of creation: Oct 2012
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Handle: RePEc:cep:cepdps:dp1171
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  1. Eckstein, Zvi & Weiss, Yoram, 2003. "On the Wage Growth of Immigrants: Israel, 1990-2000," CEPR Discussion Papers 3770, C.E.P.R. Discussion Papers.
  2. Fane Groes & Philipp Kircher & Iourii Manovskii, 2015. "The U-Shapes of Occupational Mobility," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 659-692.
  3. Krishna Pendakur & Simon Woodcock, 2008. "Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms," Discussion Papers dp08-02, Department of Economics, Simon Fraser University.
  4. Guimaraes, Paulo & Portugal, Pedro, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," IZA Discussion Papers 3935, Institute for the Study of Labor (IZA).
  5. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 1-35.
  6. Lubotsky, D., 2000. "Chutes or Ladders? A Longitudinal Analysis of Immigrant Earnings," Papers 195, Princeton, Woodrow Wilson School - Development Studies.
  7. Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2002. "Comparative Advantage, Learning, and Sectoral Wage Determination," NBER Working Papers 8889, National Bureau of Economic Research, Inc.
  8. John M. Abowd & Francis Kramarz & David Margolis, 1999. "High Wage Workers and High Wage Firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353892, HAL.
  9. Monica I. Garcia-Perez & Fredrik Andersson & John Haltiwanger & Fredrik Kristin McCue & Seth Sanders, 2011. "Workplace Concentration of Immigrants," Working Papers 2011-20, Saint Cloud State University, Department of Economics.
  10. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
  11. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 246-88, April.
  12. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  13. repec:oup:qjecon:v:111:y:1996:i:4:p:1007-47 is not listed on IDEAS
  14. Abdurrahman Aydemir & Mikal Skuterud, 2008. "The Immigrant Wage Differential within and across Establishments," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(3), pages 334-352, April.
  15. Harriet Duleep & Daniel Dowhan, 2002. "Insights from longitudinal data on the earnings growth of U.S. foreign-born men," Demography, Springer, vol. 39(3), pages 485-506, August.
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