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Reservation Wages of First and Second Generation Migrants

Listed author(s):
  • Constant, Amelie F.

    ()

    (Temple University)

  • Krause, Annabelle

    ()

    (IZA)

  • Rinne, Ulf

    ()

    (IZA)

  • Zimmermann, Klaus F.

    ()

    (University of Bonn)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5396.

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Length: 36 pages
Date of creation: Dec 2010
Handle: RePEc:iza:izadps:dp5396
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  6. Amelie Constant & Klaus Zimmermann, 2011. "Circular and Repeat Migration: Counts of Exits and Years Away from the Host Country," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 30(4), pages 495-515, August.
  7. Ira N. Gang & Klaus F. Zimmermann, 1999. "Is Child Like Parent? Educational Attainment and Ethnic Origin," Departmental Working Papers 199614, Rutgers University, Department of Economics.
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  10. Constant, Amelie & Krause, Annabelle & Rinne, Ulf & Zimmermann, Klaus F, 2011. "Economic Preferences and Attitudes of the Unemployed: Are Natives and Second Generation Migrants Alike?," CEPR Discussion Papers 8207, C.E.P.R. Discussion Papers.
  11. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-1676, November.
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  26. Amelie Constant & Liliya Gataullina & Klaus F. Zimmermann, 2006. "Ethnosizing Immigrants," Discussion Papers of DIW Berlin 567, DIW Berlin, German Institute for Economic Research.
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  34. Ben Kriechel & Gerard Pfann, 2006. "Learning to update your reservation wage while looking for a new job," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 5(2), pages 135-148, August.
  35. Chiswick, Barry R, 1977. "Sons of Immigrants: Are They at an Earnings Disadvantage?," American Economic Review, American Economic Association, vol. 67(1), pages 376-380, February.
  36. George J. Borjas, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 123-150.
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