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Reservation Wages of First and Second Generation Migrants

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  • Amelie Constant
  • Annabelle Krause
  • Ulf Rinne
  • Klaus F. Zimmermann

Abstract

This paper analyzes the reservation wages of first and second generation migrants. Based on recently collected and rich survey data of a representative inflow sample into unemployment in Germany, we empirically test the hypothesis that reservation wages increase from first to second generation migrants. Two extensions of the basic job search model, namely an unknown wage offer distribution and different reference standards, provide theoretical justifications for this conjecture. In both extensions, changing frames of reference are identified as a channel through which the phenomenon of increasing reservation wages may arise. In as far as language skills or self-evaluated returns to characteristics reflect a person's frames of reference, we find empirical support for this mechanism to be present.

Suggested Citation

  • Amelie Constant & Annabelle Krause & Ulf Rinne & Klaus F. Zimmermann, 2010. "Reservation Wages of First and Second Generation Migrants," Discussion Papers of DIW Berlin 1089, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1089
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Annette Bergemann & Marco Caliendo & Gerard J. van den Berg & Klaus F. Zimmermann, 2011. "The threat effect of participation in active labor market programs on job search behavior of migrants in Germany," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 777-795, October.
    2. Rinne, Ulf & Schüller, Simone & Zimmermann, Klaus F., 2010. "Ethnische Vielfalt und Arbeitsmarkterfolg," IZA Standpunkte 34, Institute of Labor Economics (IZA).
    3. Gil Epstein & Odelia Heizler, 2014. "Ethnosizing Immigrants: A Theoretical Framework," CReAM Discussion Paper Series 1441, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    4. Stephan Humpert & Christian Pfeifer, 2013. "Explaining age and gender differences in employment rates: a labor supply-side perspective [Eine Erklärung alters- und geschlechtsspezifischer Unterschiede in den Beschäftigungsquoten: Die Sicht de," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 46(1), pages 1-17, March.
    5. Amelie F. Constant & Martin Kahanec & Ulf Rinne & Klaus F. Zimmermann, 2011. "Ethnicity, job search and labor market reintegration of the unemployed," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 753-776, October.
    6. Patrick Arni & Marco Caliendo & Steffen Künn & Klaus Zimmermann, 2014. "The IZA evaluation dataset survey: a scientific use file," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-20, December.
    7. Chletsos Michael & Roupakias Stelios, 2019. "Do Immigrants Compete with Natives in the Greek Labour Market? Evidence from the Skill-Cell Approach before and during the Great Recession," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-30, April.
    8. Constant, Amelie F. & Tien, Bienvenue N., 2011. "Germany's Immigration Policy and Labor Shortages," IZA Research Reports 41, Institute of Labor Economics (IZA).
    9. Edo Anthony, 2015. "The Impact of Immigration on Native Wages and Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1151-1196, July.
    10. Gil Epstein & Odelia Heizler (Cohen), 2015. "Ethnic identity: a theoretical framework," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-11, December.
    11. Rinne, Ulf & Schüller, Simone & Zimmermann, Klaus F., 2011. "Ethnische Vielfalt und Arbeitsmarkterfolg (Ethnic diversity and labor market success)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(1/2), pages 81-89.
    12. Anthony Edo, 2016. "How do rigid labor markets absorb immigration? Evidence from France," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.

    More about this item

    Keywords

    Migration; Ethnic Identity; Ethnosizer; Germany; Unemployment; Job Search; Reservation Wages;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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