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Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany

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  • Leilanie Basilio
  • Thomas K. Bauer
  • Anica Kramer

Abstract

This paper investigates the transferability of human capital across countries and the contribution of imperfect human capital portability to the explanation of the immigrant-native wage gap. Using data for West Germany, our results reveal that, overall, education and in particular labor market experience accumulated in the home countries of the immigrants receive signifiantly lower returns than human capital obtained in Germany. We further find evidence for heterogeneity in the returns to human capital of immigrants across countries. Finally, imperfect human capital transferability appears to be a major factor in explaining the wage differential between natives and immigrants.

Suggested Citation

  • Leilanie Basilio & Thomas K. Bauer & Anica Kramer, 2014. "Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany," SOEPpapers on Multidisciplinary Panel Data Research 671, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp671
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    Cited by:

    1. Christoph Wunder & Regina T. Riphahn, 2014. "The dynamics of welfare entry and exit amongst natives and immigrants," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 580-604.
    2. Federica D’Isanto & Panagiotis Fouskas & Melania Verde, 2016. "Determinants of Well-being Among Legal and Illegal Immigrants: Evidence from South Italy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(3), pages 1109-1141, April.
    3. Brenzel, Hanna & Reichelt, Malte, 2015. "Job mobility as a new explanation for the immigrant-native wage gap : a longitudinal analysis for the German labor market," IAB Discussion Paper 201512, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Jahn, Elke & Hirsch, Boris & Toomet, Ott & Hochfellner, Daniela, 2013. "Does better pre-migration performance accelerate immigrants' wage assimilation?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79833, Verein für Socialpolitik / German Economic Association.
    5. Christina Gathmann & Nicolas Keller, 2014. "Returns to Citizenship?: Evidence from Germany's Recent Immigration Reforms," SOEPpapers on Multidisciplinary Panel Data Research 656, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Sónia Cabral & Cláudia Duarte, 2013. "Mind the gap! The relative wages of immigrants in the Portuguese labour market," Working Papers w201305, Banco de Portugal, Economics and Research Department.
    7. de la Rica, Sara & Glitz, Albrecht & Ortega, Francesc, 2013. "Immigration in Europe: Trends, Policies and Empirical Evidence," IZA Discussion Papers 7778, Institute for the Study of Labor (IZA).
    8. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, Elsevier.
    9. Sónia Cabral & Cláudia Duarte, 2012. "The wage gap of immigrants in the Portuguese labour market," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    10. Robert C. M. Beyer, 2017. "The Performance of Immigrants in the German Labor Market," SOEPpapers on Multidisciplinary Panel Data Research 892, DIW Berlin, The German Socio-Economic Panel (SOEP).
    11. Bonin, Holger, 2017. "Report No. 75: The Potential Economic Benefits of Education of Migrants in the EU," IZA Research Reports 75, Institute for the Study of Labor (IZA).
    12. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    13. Schwientek, Caroline, 2016. "Are immigrants overeducated in Germany? Determinants and wage effects of educational mismatch," FAU Discussion Papers in Economics 07/2016, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    14. Hirsch, Boris & Jahn, Elke J. & Toomet, Ott & Hochfellner, Daniela, 2014. "Do better pre-migration skills accelerate immigrants' wage assimilation?," Labour Economics, Elsevier, vol. 30(C), pages 212-222.
    15. 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.
    16. Jain, Apoorva & Peter, Klara Sabirianova, 2017. "Limits to Wage Growth: Understanding the Wage Divergence between Immigrants and Natives," IZA Discussion Papers 10891, Institute for the Study of Labor (IZA).
    17. Albrecht Glitz & Daniel Wissmann, 2017. "Skill Premiums and the Supply of Young Workers in Germany," CESifo Working Paper Series 6576, CESifo Group Munich.
    18. Tani, Massimiliano, 2018. "Selective Immigration, Occupational Licensing, and Labour Market Outcomes of Foreign-Trained Migrants," IZA Discussion Papers 11370, Institute for the Study of Labor (IZA).
    19. Bonin, Holger & Rinne, Ulf, 2017. "Report No. 76: Machbarkeitsstudie zur Durchführung einer Evaluation der arbeitsmarktpolitischen Integrationsmaßnahmen für Flüchtlinge," IZA Research Reports 76, Institute for the Study of Labor (IZA).
    20. Mari Kangasniemi & Merja Kauhanen, 2013. "Characteristics and labour market performance of the new member state (NMS12) immigrants in Finland, Germany, the Netherlands and the United Kingdom," Norface Discussion Paper Series 2013002, Norface Research Programme on Migration, Department of Economics, University College London.
    21. Ognjen Obućina, 2013. "The Patterns of Satisfaction Among Immigrants in Germany," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(3), pages 1105-1127, September.

    More about this item

    Keywords

    Human Capital; Rate of Return; Immigration; Assimilation;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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