Wage Mobility of Foreign-Born Workers in the United States
This paper presents new evidence on whether foreign-born workers assimilate. While the existing literature focuses on the convergence/divergence of mean wages, this study extends the analysis to the distribution of wages by looking at wage mobility. We draw on a first-order Markov-switching model to measure the foreign-native gap in year-to-year transition probabilities from one decile group to another of a wage distribution, where the deciles are determined by a native sample. Using the matched Current Population Survey for 1996 to 2008, our results suggest that age, marital status, and education are important in wage mobility for both foreign-born and native-born individuals and that the majority of foreign-born workers fail to assimilate. Immigrants in top decile groups are more likely to keep up or improve relative to natives, while those in middle and bottom decile groups tend to fall behind. We conclude that the widening foreign-native gap in mean wages with U.S. experience is mostly driven by the middle and bottom decile group immigrants from Central and South America and the bottom decile group immigrants from Asia.
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