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Socioeconomic Assimilation and Wealth Accumulation of Migrants in Australia

  • Vaira-Lucero, Matias

    ()

    (Macquarie University, Sydney)

  • Nahm, Daehoon

    ()

    (Macquarie University, Sydney)

  • Tani, Massimiliano

    ()

    (IZA)

This paper investigates to what extent the wealth accumulation of immigrants is explained by their degree of assimilation, defined as the immigrants' capacity to become more similar over time to the local people in terms of their norms, values, behaviours, and socioeconomic characteristics. The existing practice to measure assimilation is the use of a time-dimensioned variable like years since migration, which reflects the individual's adaptation to the host country through the implied acquisition of relevant skills and experience. We complement this approach by defining assimilation on the basis of migrants' subjective assessments of integration within the community. To do so, we exploit the rich information collected by the Household Income and Labour Dynamics in Australia Survey (HILDA). In particular, we explore the possible relationship between migrants' savings and assimilation estimating several models, from a pooled OLS to panel data models such as random effect and population average. We find that assimilation has a significant positive effect on wealth accumulation, but in different degrees depending on migrants origins and the type of assets. Understanding migrants' wealth and their perceived degree of assimilation is relevant to understand the supply of domestic savings and their variability. It also carries policy implications on what could be done to affect migrants' sense of assimilation and connected economic behaviour.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6969.

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Length: 24 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6969
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  1. Antecol, Heather & Kuhn, Peter J. & Trejo, Stephen, 2003. "Assimilation via Prices or Quantities? Labor Market Institutions and Immigrant Earnings Growth in Australia, Canada, and the United States," IZA Discussion Papers 802, Institute for the Study of Labor (IZA).
  2. Barry R. Chiswick & Paul W. Miller, 2012. "Negative and Positive Assimilation, Skill Transferability, and Linguistic Distance," Journal of Human Capital, University of Chicago Press, vol. 6(1), pages 35 - 55.
  3. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
  4. Hatton, Timothy J. & Leigh, Andrew, 2007. "Immigrants Assimilate as Communities, Not Just as Individuals," IZA Discussion Papers 2538, Institute for the Study of Labor (IZA).
  5. Kimball, Miles S, 1993. "Standard Risk Aversion," Econometrica, Econometric Society, vol. 61(3), pages 589-611, May.
  6. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1994. "Income Risk, Borrowing Constraints and Portfolio Choice," CEPR Discussion Papers 888, C.E.P.R. Discussion Papers.
  7. Christopher D. Carroll, 1996. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," NBER Working Papers 5788, National Bureau of Economic Research, Inc.
  8. Catalina Amuedo-Dorantes & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, Southern Economic Association, vol. 69(1), pages 48-71, July.
  9. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, November.
  10. Schaeffer, Peter V, 1995. "The Work Effort and the Consumption of Immigrants as a Function of Their Assimilation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 625-42, August.
  11. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
  12. Deborah A. Cobb-Clark & Vincent A. Hildebrand, 2009. "The Asset Portfolios of Native-born and Foreign-born Australian Households," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 46-59, 03.
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