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The Earnings Dynamics of Immigrant Labour

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  • Schmidt, Christoph M

Abstract

Empirical evidence on the labour market performance of immigrants shows that migrant workers suffer from an initial earnings disadvantage compared to observationally equivalent native workers, but that their subsequent earnings tend to increase faster than native earnings. Economists usually try to explain this phenomenon by spot markets for labour and increases in human capital. In contrast, this paper proposes a contract theoretic model as an alternative to productivity related arguments. It is argued here that the possible distinction of migrants according to their return propensities provides a natural experiment for tests for the underlying process. A test with German data weakly supports the contract model. The ideas presented here have important implications for the emerging group of new immigration countries, most prominently for those in Western Europe.

Suggested Citation

  • Schmidt, Christoph M, 1993. "The Earnings Dynamics of Immigrant Labour," CEPR Discussion Papers 763, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:763
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    Citations

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    Cited by:

    1. Viola Angelini & Laura Casi & Luca Corazzini, 2015. "Life satisfaction of immigrants: does cultural assimilation matter?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(3), pages 817-844, July.
    2. repec:zbw:rwirep:0020 is not listed on IDEAS
    3. Sloane, Peter J. & Gazioglu, Saziye, 1996. "Immigration and occupational status: A study of Bangladeshi and Turkish fathers and sons in the London labour market," Labour Economics, Elsevier, vol. 3(4), pages 399-424, December.
    4. Michael Shields & Stephen Wheatley Price, 1998. "The earnings of male immigrants in England: evidence from the quarterly LFS," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1157-1168.
    5. Okoampah, Sarah, 2016. "Estimating earnings assimilation of immigrants to Germany: Evidence from a double cohort model," Ruhr Economic Papers 630, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Licht, Georg & Steiner, Viktor, 1993. "Assimilation, labour market experience, and earnings profiles of temporary and permanent immigrant workers in germany," ZEW Discussion Papers 93-06, ZEW - Leibniz Centre for European Economic Research.
    7. Fertig, Michael & Schurer, Stefanie, 2007. "Labour Market Outcomes of Immigrants in Germany – The Importance of Heterogeneity and Attrition Bias," Ruhr Economic Papers 20, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Michael Fertig & Stefanie Schurer, 2007. "Labour Market Outcomes of Immigrants in Germany – The Importance of Heterogeneity and Attrition Bias," Ruhr Economic Papers 0020, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    9. Michael Fertig & Stefanie Schurer, 2007. "Earnings Assimilation of Immigrants in Germany: The Importance of Heterogeneity and Attrition Bias," SOEPpapers on Multidisciplinary Panel Data Research 30, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    Keywords

    Earnings Dynamics; Human Capital; Implicit Contracts; Migration;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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