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Does citizenship matter? The economic impact of naturalizations in Germany

  • Steinhardt, Max Friedrich

The paper analyzes whether citizenship acquisition affects the labor market performance of immigrants in Germany. Up to the present, there is no empirical evidence about this question for Germany. Theoretically, naturalization can increase the productivity by enabling unrestricted access to the labor market. Furthermore, naturalization can increase the labor market opportunities of immigrants by a reduction of administrative costs for the employer. Eventually, the willingness to invest in human capital may increase with the decision to naturalize, which would boost productivity even prior to naturalization. A drawback of most conducted studies for the US, Canada or the Netherlands is that they are based on cross-sectional data. This disables the possibility to control for processes of selfselection within the group of immigrants and to identify the impact channel. In the following the study uses data from the IAB employment sample which allows conducting cross- sectional and panel analysis. The descriptive analysis reveals strong processes of self-selection within the immigrant workforce concerning the naturalization decision. The estimates from a simple OLS estimation indicate a wage premium of naturalized immigrants, whereas the impact for Third Country Nationals has the largest size. Panel estimations show an immediate positive naturalization effect on wages. Furthermore they indicate accelerated wage growth in the years after the naturalization. It is a question of integration policy whether this passport advantage in the assimilation process is intended.

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Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 3-13.

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Date of creation: 2008
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Handle: RePEc:zbw:hwwirp:3-13
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  1. Christian Dustmann & Albrecht Glitz & Thorsten Vogel, 2006. "Employment, Wages, and the Economic Cycle: Differences between Immigrants and Natives," CReAM Discussion Paper Series 0609, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. DeVoretz, Don J., 2006. "The Economics of Citizenship: A Common Intellectual Ground for Social Scientists?," IZA Discussion Papers 2392, Institute for the Study of Labor (IZA).
  3. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, August.
  4. Bernt Bratsberg & James F. Ragan & Zafar M. Nasir, 2002. "The Effect of Naturalization on Wage Growth: A Panel Study of Young Male Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 568-597, July.
  5. Bernd Fitzenberger & Aderonke Osikominu & Robert Völter, 2006. "Imputation Rules to Improve the Education Variable in the IAB Employment Subsample," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(3), pages 405-436.
  6. Jacob Mincer & Solomon Polacheck, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 397-431 National Bureau of Economic Research, Inc.
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  8. Kaas, Leo & Manger, Christian, 2010. "Ethnic Discrimination in Germany's Labour Market: A Field Experiment," IZA Discussion Papers 4741, Institute for the Study of Labor (IZA).
  9. DeVoretz, Don J. & Pivnenko, Sergiy, 2005. "Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship," IZA Discussion Papers 1463, Institute for the Study of Labor (IZA).
  10. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 76-110 National Bureau of Economic Research, Inc.
  11. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Non-response in panel data : The impact on estimates of a life cycle consumption function," Other publications TiSEM 3c661e33-2cd1-47f1-a7d9-3, School of Economics and Management.
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  14. Steinhardt, Max Friedrich, 2007. "Aktuelle Trends der Einbürgerungen in Deutschland," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1998 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 87(8), pages 544-549.
  15. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, June.
  16. Bevelander, Pieter & Veenman, Justus, 2006. "Naturalisation and Socioeconomic Integration: The Case of the Netherlands," IZA Discussion Papers 2153, Institute for the Study of Labor (IZA).
  17. DeVoretz, Don J. & Pivnenko, Sergiy, 2004. "The Economic Causes and Consequences of Canadian Citizenship," IZA Discussion Papers 1395, Institute for the Study of Labor (IZA).
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  19. Francesca Mazzolari, 2009. "Dual citizenship rights: do they make more and richer citizens?," Demography, Springer, vol. 46(1), pages 169-191, February.
  20. Locke, John, 1690. "Two Treatises of Government," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number locke1690a.
  21. Nijman, Theo & Verbeek, Marno, 1992. "Nonresponse in Panel Data: The Impact on Estimates of a Life Cycle Consumption Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(3), pages 243-57, July-Sept.
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