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Reservation Wages of First and Second Generation Migrants

Author Info

  • 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.

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

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Find related papers by 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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  6. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
  7. Constant, Amelie & Gataullina, Liliya & Zimmermann, Klaus F, 2008. "Naturalization Proclivities, Ethnicity and Integration," CEPR Discussion Papers 6656, C.E.P.R. Discussion Papers.
  8. Amelie Constant & Klaus F. Zimmermann, 2006. "Legal Status at Entry, Economic Performance, and Self-Employment Proclivity: A Bi-National Study of Immigrants," Discussion Papers of DIW Berlin 547, DIW Berlin, German Institute for Economic Research.
  9. Gang, Ira N. & Zimmermann, Klaus F., 1999. "Is Child like Parent? Educational Attainment and Ethnic Origin," IZA Discussion Papers 57, Institute for the Study of Labor (IZA).
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  16. Thomsen, Stephan L. & Gernandt, Johannes & Aldashev, Alisher, 2008. "The Immigrant Wage Gap in Germany," ZEW Discussion Papers 08-089, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  20. Caliendo, Marco & Falk, Armin & Kaiser, Lutz C. & Schneider, Hilmar & Uhlendorff, Arne & van den Berg, Gerard J. & Zimmermann, Klaus F., 2010. "The IZA Evaluation Dataset: Towards Evidence-Based Labor Policy-Making," IZA Discussion Papers 5400, Institute for the Study of Labor (IZA).
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  23. Constant, Amelie & Gataullina, Liliya & Zimmermann, Klaus F, 2006. "Ethnosizing Immigrants," CEPR Discussion Papers 5636, C.E.P.R. Discussion Papers.
  24. Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, vol. 9(2), pages 93-123, October.
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Cited by:

  1. Bergemann, Annette & Caliendo, Marco & van den Berg, Gerard J. & Zimmermann, Klaus F., 2011. "The threat effect of participation in active labor market programs on job search behavior of migrants in Germany," Working Paper Series 2011:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Rinne, Ulf & Schüller, Simone & Zimmermann, Klaus F., 2010. "Ethnische Vielfalt und Arbeitsmarkterfolg," IZA Standpunkte 34, Institute for the Study of Labor (IZA).
  3. Gil S. Epstein & Odelia Heizler (Cohen), 2015. "Ethnosizing Immigrants: A Theoretical Framework," Development Working Papers 384, Centro Studi Luca d'Agliano, University of Milano.
  4. Stephan Humpert & Christian Pfeifer, 2011. "Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective," Working Paper Series in Economics 214, University of Lüneburg, Institute of Economics.
  5. Constant, Amelie F. & Tien, Bienvenue N., 2011. "Report No. 41: Germany's Immigration Policy and Labor Shortages," IZA Research Reports 41, Institute for the Study of Labor (IZA).
  6. Anthony Edo, 2016. "How do rigid labor markets absorb immigration? Evidence from France," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
  7. Amelie Constant & Martin Kahanec & Ulf Rinne & Klaus F. Zimmermann, 2009. "Ethnicity, Job Search and Labor Market Reintegration of the Unemployed," Discussion Papers of DIW Berlin 963, DIW Berlin, German Institute for Economic Research.
  8. Arni, Patrick & Caliendo, Marco & Künn, Steffen & Zimmermann, Klaus F., 2014. "The IZA Evaluation Dataset Survey: A Scientific Use File," IZA Discussion Papers 7971, Institute for the Study of Labor (IZA).
  9. Gil Epstein & Odelia Heizler (Cohen), 2015. "Ethnic identity: a theoretical framework," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-11, December.
  10. Anthony Edo, 2013. "The Impact of Immigration on Native Wages and Employment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881131, HAL.

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