How Labor Migrants Fare PDF
Preview How Labor Migrants Fare
Population Economics Editorial Board John Ermisch Bengt-Arne Wickstrom Klaus F. Zimmermann Springer Berlin Heidelberg New York Hong Kong London Milan Paris Tokyo Titles in the Series Jacques 1. Siegers . Jenny de Jong-Gierveld . Evert van Imhoff (Eds.) Female Labour Market Behaviour and Fertility Hendrik P. van Dalen Economic Policy in a Demographically Divided World Dieter Bos· Sijbren Cnossen (Eds.) Fiscal Implications of an Aging Population Klaus F. Zimmermann (Ed.) Migration and Economic Development Nico Heerink Population Growth, Income Distribution, and Economic Development (out of print) Tommy Bengtsson (Ed.) Population, Economy, and Welfare in Sweden 1. Haisken-De New Migration and the Inter-Industry Wage Structure in Germany Dennis A. Ahlburg . Allen C. Kelley· K. Oppenheim Mason (Eds.) The Impact of Population Growth on Well-being in Developing Countries Holger Bonin Generational Accounting Klaus F. Zimmermann· Michael Vogler (Eds.) Family, Household and Work Klaus F. Zimmermann Amelie Constant Editors How Labor Migrants Fare With 34 Figures and 114 Tables Springer Professor Dr. Klaus F. Zimmermann Forschungsinstitut zur Zukunft der Arbeit (IZA) Schaumburg-Lippe-StraBe 7-9 53113 Bonn, Germany zimmermann @iza.org Dr. Amelie Constant University of Pennsylvania Population Studies Center Locust Walk 3718 19104 Philadelphia, PA, USA [email protected] ISBN 978-3-642-53448-5 ISBN 978-3-540-24753-1 (eBook) DOI 10.1007/978-3-540-24753-1 Bibliographic information published by Die Deutsche Bibliothek Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data available in the internet at http./ldnb.ddb.de This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. Springer-Verlag is a part of Springer Science+Business Media springeronline.com © Springer-Verlag Berlin Heidelberg 2004 Softcover reprint of the hardcover 1st edition 2004 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: Erich Kirchner, Heidelberg SPIN 10917534 42/3130 - 5 4 3 2 1 0 - Printed on acid free paper Contents Part I Introduction Constant A, Zimmermann KF How do labor migrants fare? . . . . 1 Part II Migration and Earnings Hatton T1, Bailey RE Natives and migrants in the London labour market, 1929-1931 . . 13 Hatton TJ How much did immigrant "quality" decline in late nineteenth century America? . . .37 Longva P, Raaum 0 Earnings assimilation of immigrants in Norway - A reappraisal . . . . . . . . . . · .. 55 Constant A, Massey DS Self-selection, earnings, and out-migration: A longitudinal study of immigrants to Germany .. 73 Hartog 1, Winkelmann R Comparing migrants to non-migrants: The case of Dutch migration to New Zealand · .. 97 Part III Employment. Unemployment. Self-Employment and Occupational Success Bevelander P, Nielsen HS Declining employment success of immigrant males in Sweden: Observed or unobserved characteristics? . . . . .. . .121 Wheatley Price S The employment adjustment of male immigrants in England . .139 Shields MA, Wheatley Price S The English language fluency and occupational success of ethnic minority immigrant men living in English metropolitan areas. . . . . . . . . . · . .167 VI Contents Lofstrom M Labor market assimilation and the self-employment decision of immigrant entrepreneurs . . . . . . . . . . 191 Part IV Linguistic Issues and Educational Attainment Chiswick BR, Miller PW Immigrant earnings: Language skills, linguistic concentrations and the business cycle. .223 Riphahn RT Cohort effects in the educational attainment of second generation immigrants in Germany: An analysis of census data. . . . . . . . . . .251 Part V Illegal, Legalized and Unwilling Migrants Chiswick BR, Miller PW Language skills and earnings among legalized aliens. . . . . . 279 Rivera-Batiz FL Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States . . . . . . . . . . . .307 Kossoudji SA, Cobb-Clark DA IRCA's impact on the occupational concentration and mobility of newly-legalized Mexican men. . . . . . . . . . . . .333 Kuhn P, Sweetman A Aboriginals as unwilling immigrants: Contact, assimilation and labour market outcomes .351 Part VI Policy Issues: Selection Criteria and Public Sector Effects Cobb-Clark DA Public policy and the labor market adjustment of new immigrants to Australia . . . . . . .377 Gustafsson B, Osterberg T Immigrants and the public sector budget - accounting exercises for Sweden. . . . .405 How do labor migrants fare? Amelie Constant)' 2, Klaus F. Zimmermann)' 3 1 IZA, P.O. Box 7240, 53072 Bonn, Germany (e-mail: {constant; zimmermann}@iza.org) 2 IZA and Population Studies Center, University of Pennsylvania, USA 3 IZA, Berlin, Bonn University and Free University of Berlin 1. Introduction Migration is now a major area of interest in economics. This is fostered by a few global developments: The differences in economic growth among countries prevail or even rise and the freedom of moving is increasing. The demographic gaps between various regions across the world become more marked; aging and shrinking populations at one side and growing popula tions at the other side provide further motives for mobility. Globalization of information and production provides a stronger pressure on countries to adjust, and the demand for speed can only be satisfied by migrants. The rising importance of human capital in the production of goods and services around the world is followed by a decline in the demand for unskilled labor. This causes migratory moves from two adverse situations: There is excess demand and hence global competition for high-skilled workers who will work more flexible across countries and throughout their working life. Low-skilled workers, who exhibit excess supply on their labor markets, become more and more forced migrants who have to move to find a safe heaven in their struggle to satisfy their basic economic needs and better their lives. It is hard to find a country that has not been touched by migration. These challenges are covered by the migration literature only in a very limited way. Research has clustered around four major research themes: (i) the determinants of migration, (ii) the assimilation of the migrants, (iii) the effects of immigrants on the natives, and (iv) migration policy. A number of recent books deal with these issues: The series of articles con tained in the four book volumes on the "Economics of Migration" selected by Zimmermann and Bauer (2002) from a rich literature on mobility has set a particular focus on work, within this framework, relevant to the European situation. The book "Migration" edited by Faini, de Melo and Zimmermann (1999) has investigated the interactions between migration, trade and development. And the book "Immigration Policy and the Welfare System" edited by Boeri, Hanson and McCormick (2002) provides a recent update and an overview of migration data and policy issues for Europe and the United States. 2 A. Constant, K. F. Zimmermann There is still a substantial lack of empirical evidence for the European countries. Hence, the new book edited by Zimmermann (2004) on "European Migration: What Do We Know?" complements the literature by filling this gap, and provides a major source of reference. It collects original country chapters for all major European countries and contrasts the European evi dence with experiences from most of the traditional immigration countries. This book provides for the first time a complete evidence for Europe: How do migrants fare and assimilate on the labor markets of the host country? How do they affect the economic conditions of the native labor force? The evolution of migration policies and migration flows is studied and contrasted with the evidence in traditional immigration countries. The new book presented and introduced here contains fresh eclectic research from the Journal of Population Economics on the particular issue of how migrants adjust to the labor market of the host country and how do they and their children fare and become part of the new country's life. Using data from the United States, Canada, many European countries, Australia and New Zealand, the chapters study the developments of earn ings, employment, unemployment, self-employment, occupational choices and educational attainment after migration. The book also investigates the role of language in labor market integration and examines the situation of illegal, legalized and unwilling migrants. Policy effects are also studied: Among those are the effects of selection criteria on labor market success and the effects immigrants have on the public sector budget of the receiving country. Hence, the book provides a broad picture of the performance of migrants. 2. Migration and earnings A large body of migration research deals with the earnings performance and assimilation into the labor market of the receiving countries. A key question studied since the seminal contribution by Chiswick (1978) is the speed of the adjustment of immigrant earnings relative to the earnings of natives. Typically, immigrants start with an earnings disadvantage upon arrival. In some countries, they reach earnings' parity; in others, earnings convergence is insufficient or non-existent. It is also of much interest how different migrants behave in comparison with their countrymen at home, and whether return migration biases the estimates in the earnings functions of the remaining migrants in the host country. Part II of the book contains a fresh look at these issues using historical data from the United Kingdom and the United States of America, and contemporary data from Norway, Germany and New Zealand. Timothy J. Hatton and Roy E. Bailey study "Natives and migrants in the London labour market, 1929-1931". While findings on more recent experi ences suggest that migrants are often regarded as marginal workers in metropolitan labor markets, and, hence, their earnings are lagging behind those of the natives, the historical literature has often argued that migrants to London in the late nineteenth and early twentieth century exhibited advantages rather than disadvantages in earnings and the availability of lucrative jobs. Hatton and Bailey contribute to the literature and our understanding of migrant performance by employing a formal econometric How do labor migrants fare? 3 analysis on data from the New Survey of London Life and Labour, a large survey of working class households. Their research finds some evidence that migrants performed actually well. However, the earnings advantage and the lower incidence of unemployment associated with migrants is small. The differences can largely be accounted for by individual characteristics and particularly skill levels. Thus there was no discrimination on the London labor market between migrants and non-migrants. Hatton and Bailey con clude that there was a strong element of selectivity present among migrants to London, which has caused a slow inflow of workers from high unem ployment areas. Immigrant quality is often determined in terms of earnings and the con jecture that the erosion of migrant earnings is associated with a decline in such quality has been a frequently studied research issue in the past decades. This question had been posed by Borjas (1985, 1995) and is studied in this volume by Timothy J. Hatton in his contribution "How much did immigrant 'quality' decline in late nineteenth century America?" In the early twentieth century it was argued that recent American immigrants were less skilled and lower motivated than the older ones. The study begins by elaborating the parallels between immigration in the era of free migration in the years 1870- 1913 and those experiences in the last 40 years. Both periods can be seen as phases of mass migration. Hatton constructs his data base from the cross tabulations provided in the volumes of the Immigration Commission Reports of the time. He estimates wage equations allowing for different effects by nationality and for different characteristics upon arrival. These differentials measured through the regressions are then applied to the immigrant com position to measure the effects of the changing composition on immigrant earnings. Hatton demonstrates a dramatic shift in the nationality composition of the immigrants, which accounted for almost the entire decline in immigrant wages relative to natives. Whereas immigrant quality declined due to a shift in the composition of the migration flows, these effects are very slow compared to those we observe in the United States today. The rhetoric of a perceived quality decline, which was present in the public debate in America, forty years before World War I, was hence, unjustified. The assimilation of earnings of migrants in today's European countries is not sufficiently studied. Pal Longva and Oddbjorn Raaum help to fill this gap with their contribution on "Earnings assimilation of immigrants in Norway - A reappraisal". They investigate the adjustments of earnings using the 1980 and the 1990 Norwegian Population Census supplemented by administrative data for 1990. The study is superior to previous investigations in that it defines immigrant status by country of origin rather than citizenship and observe the exact year of arrival. Their research finds considerable differences between migrant cohorts and between the various countries of origin. Over the decade, the earnings of the 1970-1979 cohort improved by about 6% on the average, which is substantially lower than the 11 % which was reported in previous research. Longva and Raaum confirm that cross-sectional estimates exagger ate the assimilation of immigrants, but conclude that their econometric evi dence suggests that the earnings of different cohorts actually converged from 1980 to 1990. There are distinctly different patterns for OECD and Non OECD immigrants. While the earnings of OECD immigrants are comparable to those of the native Norwegian population at the time of entry and remain the same, non-OECD immigrants earn much less upon arrival but they 4 A. Constant, K. F. Zimmermann assimilate gradually over time. The assimilation for the 1970s cohort is far too low to create parity with natives. Immigration typically is not a one-way street; it induces return migration or even circular movements. This may bias the estimates of earnings func tions, if the self-selection is markedly positive or negative depending on the earnings potential. Amelie Constant and Douglas S. Massey study this issue in their contribution on "Self-selection, earnings, and out-migration: a longitu dinal study of immigrants to Germany" using data from the German Socio economic Panel. Germany has been shown to be the major country of immigration in Europe after Word War II, with an immigrant population size comparable to the US in the early 1900s. Constant and Massey reveal that emigrants are negatively selected with respect to occupational prestige and to stable full-time employment, that there is no selectivity with respect to human capital or gender, but that out-migration is strongly associated with the range and nature of social attachments to Germany and the sending countries. Although there is pronounced selection with respect to return migration, this selective emigration does not appear to distort cross-sectional estimates of earnings assimilation for men and women immigrants in Germany at a rel evant level. This novel finding is derived using a longitudinal data set of 14 waves that enables the researchers to compare the earnings estimates of the full sample in the first wave to the sample excluding the individuals emi grating later in the panel. Constant and Massey confirm that immigrant earnings increase with education, age, years since migration, hours of work, and occupational prestige, and are significantly lower for females than for males. There are differences in earnings among the immigrant nationalities, with European Union nationals earning more than any other group. The fifth continent has notoriously received many migrants in recent history. In their paper "Comparing migrants to non-migrants: The Case of Dutch migration to New Zealand", loop Hartog and Rainer Winkelmann study the fate of one ethnic group of migrants in that area in the post World War II period. They follow a methodological strategy advocated by Bauer, Pereira, Vogler and Zimmermann (2002), who had used Portuguese and German data to evaluate immigrant behavior. They proposed to merge data from both the sending and the receiving country to be able to compare migrants to the performance of natives in the sending and the receiving countries and to prepare a contra-factual analysis that answers the question of whether or not migrants would have performed better at home. For that purpose, Hartog and Winkelmann merge Dutch and New Zealand micro data sets (including data on Dutch immigrants to New Zealand) and compare the earnings of the Dutch migrants to the earnings of those who had remained home in the Netherlands and to the earnings of the New Zealanders. They find that the migrant earnings dip in comparison with the native New Zealanders is substantial: 15% for males and over 30% for females. The catch-up rate on years since migration is too slow to ever really make up for the initial dif ference. The econometric evidence further exhibits that returns to education are somewhat higher in the Netherlands in comparison to the returns the migrants receive in New Zealand. (However: New Zealanders in New Zea land have a higher return than Dutch in Holland.) Dutch experience is about equally rewarded in the Netherlands and in New Zealand, but at a substan tially lower rate for women than for men. The returns to experience gained in New Zealand are higher than the New Zealand returns to Dutch experience.
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