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Reservation Wages of First and Second Generation Migrants

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

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.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1089.

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Length: 33 p.
Date of creation: 2010
Date of revision:
Handle: RePEc:diw:diwwpp:dp1089
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  6. Amelie Constant & Klaus F. Zimmermann, 2009. "Work and Money: Payoffs by Ethnic Identity and Gender," Discussion Papers of DIW Berlin 908, DIW Berlin, German Institute for Economic Research.
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  24. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
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