Public policy and the labor market adjustment of new immigrants to Australia

Two separate cohorts of immigrants to Australia are compared in order to assess the potential role of immigrant selection criteria, labor market conditions, and income-support policy in facilitating the labor market adjustment of new arrivals. Although these two cohorts entered Australia only five years apart, their initial labor market outcomes varied dramatically. The results indicate that changes in immigration policy may have led to increased human capital endowments that in turn resulted in higher participation rates and reduced unemployment. At the same time, improvement in Australian labor market conditions and changes in income-support policy over the 1990s – which most likely altered the returns to human capital – were probably instrumental in reinforcing the effects of tighter immigrant selection criteria. As much as half of the fall in unemployment rates among women and one third the decline among men appears to have occurred as the result of changes in the returns to demographic and human capital characteristics. Responsible editor:Christoph M. Schmidt     

Cohort effects in the educational attainment of second generation immigrants in Germany: An analysis of census data

Even though second generation immigrants make up ever increasing population shares in industrialized countries we know little about their social integration and wellbeing. This study focuses on the educational attainment of German born children of immigrants. Their schooling success still lags behind that of natives. This paper investigates school attendance and completed degrees of second generation immigrants and finds that even after controlling for characteristics the educational gap remains large and significant. The available evidence suggests that this group as a whole does not assimilate to native educational standards and instead increasingly falls behind.This research was completed while the author was guest at the Institute for the Study of Labor (IZA) in Bonn, Germany. I am grateful for IZAs hospitality and particularly for the help of Thomas K. Bauer. I thank the anonymous referees and the editors for very helpful comments. Responsible editors: David Card and Christoph M. Schmidt.     

The long-run labour market consequences of teenage motherhood in Britain

Common wisdom states that teenage childbearing reduces schooling, labour market experience and adult wages. However, the decisions to be a teenage mother, to quit school, and be less attached to the labour market might all stem from some personal or family characteristics.  Using the National Child Development Study (NCDS), we find that in Britain teenage childbearing decreases the probability of post-16 schooling by 12–24%. Employment experience is reduced by up to three years, and the adult pay differential ranges from 5% to 22%. The negative impact of teen motherhood on various adult outcomes is not only due to some pre-motherhood characteristics; hence policies aiming to encourage return to school and participation in the labour market may be an efficient way to reduce the long-term consequences of teenage pregnancy. Received: 10 October 2000/Accepted: 3 April 2002 All correspondence to Arnaud Chevalier. We are indebted to Martyn Andrews, Colm Harmon, Gauthier Lanot, Ian Walker and to the participants at the EEEG annual meeting (Southampton, 2000) and seminars at Keele University, LSE and Warwick University for their comments that greatly improved earlier versions of this paper. We also thank two anonymous referees and Christoph Schmidt for their insightful comments. All remaining errors are ours. The data was supplied by the Economic and Research Council's Data Archive at the University of Essex and are used with permission of the Controller of Her Majesty's Stationery Office. Responsible editor: Christoph M. Schmidt.     

Immigrants in the UK and in West Germany –Relative income position,income portfolio,and redistribution effects

Based on data from the BHPS and the SOEP, we analyse the economic performance of various ethnic groups in the UK and West Germany, as well as the effects of income redistribution on these populations. Taking the indigenous population of each country as the reference category, we find that, as a whole, the non-indigenous population in the UK fares much better than the immigrant population in Germany. However, the range of economic performance across different ethnic groups in the UK is much larger than that in Germany. The German corporatist welfare system is characterised by much stronger redistribution effects than the liberal UK one. Consequently, the relatively low-performing immigrant population in Germany profits more from the redistribution system than immigrants with similar socio-economic attributes in the UK.All correspondence to Felix Büchel. Responsible editor: Christoph M. Schmidt     

Time preference and labour migration in an OLG model with land and capital

This paper constructs a two-country migration model in the lines of Galor (1986), in which the world population consists of individuals of two types who have different time preferences. Production uses three inputs: mobile labour, immobile capital and land. It is shown that both countries are necessarily inhabited by agents of both types and exhibit equal density of population and equal interest rate at the steady state equilibrium of the integrated economy. The steady state welfare implications of international labour migration are studied.This paper has been written during Philippe Michel's visit at CORE, September 1994. Earlier drafts of this paper have been presented at the meeting Journées d'étude générations imbriquées (Marseille, November 24–26, 1994), at the ESPE conference (Lisbon, June 1–3, 1995) and at the EEA annual meeting (Prag, September 1–3, 1995). Comments by participants are gratefully acknowledged. We are also grateful to Stéphane Déo, Kamhon Kan, Pierre Pestieau, Christoph Schmidt and two anonymous referees for helpful comments. The usual disclaimer applies.Responsible editor: Alessandro Cigno     

Unemployment and earnings for second generation immigrants in Sweden. Ethnic background and parent composition

This study sheds light on the labour market outcomes of children born to immigrants in the destination country, i.e. second generation immigrants. The study has the advantage of being able to (i) identify several different ethnic backgrounds and (ii) identify the parent composition, i.e. whether one or both parents of the individual are foreign born. The labour market outcomes of second generation immigrants mirror those of first generation immigrants in that we find heterogeneity in labour market outcomes to be associated with ethnic background. Moreover, these outcomes, especially for Southern and non-European backgrounds, are much worse than those for native-born with a Swedish background. Finally, the outcome is more favourable if one parent is born in Sweden compared to having both parents foreign born, especially if the mother is native born.All Correspondence to Dan-Olof Rooth. We are grateful for several helpful comments and suggestions from two anonymous referees. A research grant from the Swedish Council for Working Life and Social Research is gratefully acknowledged. Responsible editor: Christoph M. Schmidt.     

Children and return migration

We explore reasons for return migrations which are motivated by immigrants concerns about their children. We develop a simple model, where parents have paternalistic preferences. We show that parental concerns about the child may lead to an increase, or to a decrease in the tendency to return to the home country. Our model suggests that return plans of the parent may respond differently to the presence of daughters than to the presence of sons. The empirical test of our models relies on the exogeneity of childrens gender. We use a survey panel data set, containing information on both return realisations over 14 years, and intended return plans. Our results lend support to the hypothesis that children influence return plans of their parents.I am grateful to Jerome Adda, Jaap Abring, David Card, Slobodan Djajic, and Ian Preston for comments on earlier versions of this paper. Responsible editor: Christoph M. Schmidt.     

Immigrant and native responses to welfare reform

We investigate the effect of welfare reform in the US on the employment and hours of work of low-educated foreign-born and native-born women. For foreign-born women, we investigate whether the effect of welfare reform differed by year of immigration. We also examine whether the immigrant provisions of welfare reform had a chilling effect on those who remained eligible for benefits. Results suggest that welfare reform induced low-educated women to increase their labor market attachment; reform had larger effects on the least educated native-born women and among foreign-born, larger effects on more recent arrivals. The chilling hypothesis is not supported.All correspondence to Robert Kaestner. The authors thank Lynn Karoly, Christoph Schmidt, seminar participants at the University of Illinois and New School University, and several anonymous referees for comments on a previous draft of this paper. Robert Kaestner is grateful to the Luce Foundation for partial support for this research. Responsible editor: Christoph M. Schmidt.     

The educational attainment of second-generation immigrants in The Netherland

Since the mid-1960s the Netherlands has had a positive net immigration, mainly because of man power recruitment from Turkey and Morocco and immigration from the former Dutch colony of Surinam. Immigrants havea weak labor market position, which is related to their educational leveland language skills. Children and grandchildren of immigrants are expected to have a better chance of integration into Dutch society. In this paper we investigate whether this is true with respect to the educational attainment of second-generation immigrants from Turkey, Morocco, Surinam and the Dutch Antilles.The authors thank an anonymous referee and both editors for helpful comments. Responsible editors: David Card and Christoph M. Schmidt.     

Earnings adjustment of temporary migrants

The strong incentives of migrants to invest into human capital and the positive selective character of migration are the main explanations for the rapid decrease of the earnings gap between migrants and natives, and, in some cases, the cross-over of migrants' earings profiles with those of native workers, as found in a variety of empirical studies on migration to the USA, Canada and Australia. The present paper shows that in the case of temporary migration the optimal investment into country specific human capital should be lower than in the case of permanent migration. Investments may not be sufficient to allow migrants' earnings to catch up with those of native workers. Furthermore, it is shown that migration is positively selective only under certain labor market conditions. Empirical findings support the hypothesis that the migrant's length of stay in the host country has an effect on his investment into human capital and, consequently, on his earnings position. The results strongly suggest the need for carefully differentiating between temporary and permanent migration when investigating migrants' learnings assimilation.I am grateful to Augustin Maravall, John Micklewright, Graham Mizon, Christoph M. Schmidt, Dennis Snower and two referees for comments and suggestions made on previous drafts of this paper. All remaining errors are, of course, mine.     

Self-selection,earnings, and out-migration: A longitudinal study of immigrants to Germany

In this paper we examine the process of out-migration and investigate whether cross-sectional earnings assimilation results suffer from selection bias due to out-migration. Our 14 year longitudinal study reveals that emigrants are negatively selected with respect to occupational prestige and to stable full time employment. Our results show no selectivity with respect to human capital or gender. The likelihood of return migration is strongly determined by the range and nature of social attachments to Germany and origin countries. It is also the highest during the first five years since arrival, and grows higher toward retirement. Selective emigration, however, does not appear to distort cross-sectional estimates of earnings assimilation in a relevant way.All Correspondence to Douglas S. Massey. This study has been made possible through various research visits to DIW Berlin and IZA in Bonn. We are grateful for the access to the data, and many useful comments on various drafts by Klaus F. Zimmermann. Earlier drafts were presented at the annual conference of the Population Association of America in Atlanta, and research seminars at Princeton University and IZA, Bonn. We wish to thank many participants for stimulating discussions and useful comments. We have benefitted in making revisions from the comments of three anonymous referees. Responsible editor: Klaus F. Zimmermann.     

Immigration,skills and the labor market: International evidence

Using the 1994–1998 International Adult Literacy Survey, this paper compares cognitive skills and employment of immigrants in Canada, New Zealand, Switzerland, and the United States. Immigrants had lower cognitive test scores than natives in each country, with the largest gaps in the US, and small gaps in Canada and New Zealand. Male immigrants in the US were no less likely to work than natives, while in the other countries, male immigrants were less likely to be employed. Female immigrants were less likely in each country to be employed than natives, with an especially large gap for the US.The author thanks Francine D. Blau and two anonymous referees for helpful comments and suggestions and Katsuhide Yamashita for excellent research assistance. Responsible editor: Christoph M. Schmidt.     

Unemployment benefits, risk aversion, and migration incentives

With reference to the EU enlargement, a framework is derived which allows the study of the effect of unemployment benefits on the migration decision. While benefits simply increase the expected gain for risk neutral individuals, they work as an insurance device for risk averse migrants; the results for the two groups might differ. Thus, the migration decision is reformulated as monetary lottery. Unsurprisingly, the paper finds that risk averse individuals are less likely to engage in migration. Yet, introducing unemployment benefits also makes them select a different set of countries. The implications of selection and sorting, however, depend crucially on the link between risk aversion and economically important personal characteristics. It is also shown that unemployment benefits give rise to intertemporal trade-offs in migration returns.The author is grateful for helpful comments by Hartmut Lehmann, Christoph M. Schmidt and three anonymous referees. I also like to thank my colleagues at CERT and participants of the R.O.S.E.S. Enlargement Conference 2003 in Paris. This work has been conducted before the author joint DWP and does not reflect the opinion of the department. Responsible editor: Klaus F. Zimmermann.     

Assessing the effects of an early retirement program

We investigate induced retirement effects of the Norwegian early retirement program AFP and emphasize effects caused by relocations of some individuals from disability pension and unemployment to AFP. Theoretical considerations predict that AFP unambiguously induces more early retirement. Analyzing Norwegian register data 1994–96 with parametric and non-parametric methods, we demonstrate that i) economic incentives influence the retirement decision, ii) there is a significant net induced retirement effect, iii) by a conservative judgment, at least 50% of the AFP retirees would have stayed in the labor force without the scheme.All correspondence to Espen Bratberg. We are indebted to the referees for detailed remarks, which significantly improved the paper. Financial support from the Norwegian Research Council and the Ministry of Health and Social Affairs is greatly appreciated. We are grateful for valuable comments from Erik Hernæs and Astrid Grasdal, seminar participants at the Norwegian School of Management in Oslo, the Institute for International Economic Studies in Stockholm, and the University of Linz, the 2000 Conference of the European Society for Population Economics in Bonn, and the German-Norwegian Seminar on Social Insurance in Berlin, 2000. Bratberg would also like to thank the Humboldt University for its hospitality during a stay in the winter of 2003. Responsible editor: Christoph M. Schmidt.     

Settlement policies and the economic success of immigrants

Many countries use settlement policies to direct the inflow of immigrants away from immigrant dense areas. We evaluate a reform of Swedish immigration policy that featured the dispersion of refugee immigrants, but also a change in the approach to labor market integration. We focus on how immigrants fared because of the policy. The evaluation indicates that immigrants experienced substantial long run losses. The bulk of the effect stems from a common component that affected immigrants regardless of location. We interpret the common component as being related to a shift in policy focus, from labor market assimilation to income support.All correspondence to Per-Anders Edin. We thank two anonymous referees, Magnus Löfström, seminar participants at the Institute for Labour Market Policy Evaluation (IFAU), Uppsala University, Stockholm University, the Swedish Institute for Social Research (SOFI), the Research Institute of Industrial Economics (IUI), and the CEPR conference on Marginal Labour Markets in Metropolitan Areas for valuable comments and Lisa Fredriksson for expert data assistance. We are also grateful to Sven Hjelmskog, Roland Jansson, Stig Kattilakoski, Christina Lindblom, Anders Nilsson, Kristina Sterne, and Lena Axelsson of the Immigration Board, and Anna Gralberg of the Ministry of Culture, who generously found time to answer our questions. This research has been partly financed through a grant from the Swedish Council for Work Life Research (RALF). Responsible editor: Christoph M. Schmidt.     

Immigration,assimilation and growth

This paper analyzes the welfare effects of immigration and its subsequent effect on ethnic diversity in a model featuring human capital spillovers which depend on the degree of ethnic heterogeneity, variation rates of time preference across individuals and endogenous levels of immigration and assimilation. In the model, an increase in ethnic diversity reduces the spillovers effect for the majority. Nonetheless, immigration can be welfare improving for the majority ethnic group even if it increases the degree of diversity as long as it raises the average human capital level and/or growth rate by increasing the proportion of people with low rates of time preference. However, if an economy is too homogenous, it will not be able to attract immigrants. Finally, if the level of immigration is not too high, then immigration also raises the net benefits to assimilation which leads to a more homogenous economy. Received: 18 February 1997 / Accepted: 16 July 1997     

Measuring Social Capital and Its Differentials by Family Structures

Social capital has often been invoked to explain differences in children’s well-being by family structure. That is, developmental outcome for children in lone or step parent family is not at par with that of children from intact family because parental investments on children may be lower not only in financial and human capital but also in social capital. This proposition has been difficult to examine in greater depth because of lack of conceptual clarity and of data to measure social capital. Using a definition of social capital as the “ability to secure benefits through membership in networks and other social structures”, we focus on the impact of family structures on social capital engendered by three types of networks: (a) informal ties with kin, families, friends, neighbours, and workmates; (b) generalized relationships with local people, people in civic groups, and people in general; and, (c) relationships through institutions. In particular, we examine differences in the measures of social capital among women living with no children in various marital arrangements, and women living with children in intact, step, and lone parent families. Data from the Canadian 2003 General Social Survey on Social Engagement confirm that social capital is indeed greater in intact families than in lone parent families. Mothers in intact families (especially married mothers) have larger informal networks, are members of more primordial and purposive organizations, have greater trust in people in the family, in the neighbourhood, and in people in general, and have greater confidence in government or business institutions. In general, social capital of mothers in step families is in between that of married mothers in intact families and lone mothers. Thus, the assumption in the literature that family structure can serve as a proxy for social capital may be justified. However, this study contributes a unique way of measuring social capital in terms of networks if and when data are available and a way of investigating the relationship between family structure and social capital; that is, the former as a determinant of the latter.     

Long run opportunity-costs of children according to education of the mother in the Netherlands

Children claim a large part of the parents' potential resources, particularly their time. Direct time costs arise through the time spent out of the labour force while the children are small, indirect costs are the result of lower investment into human capital. It is demonstrated in this paper that the average opportunity costs of children of lower educated mothers can be higher than those of higher educated mothers.The author wishes to thank his colleagues from de Leerstoel Vergelijkende Bevolkings- en Emancipatie-economie, especially Siv Gustafsson, John F. Ermisch and two anonymous referees for their comments and suggestions on earlier drafts of this paper. The author is also thankful for Mr. and Mrs. van Ingen for their advice on improving the English text. Financial support from the FMO is gratefully acknowledged. Responsible editors: Siv S. Gustafsson, John F. Ermisch.     

International labor migration and social security: Analysis of the transition path

This paper numerically simulates a two-country overlapping-generations model to study international labor migration when the two countries are characterized by different social-security systems. The present analysis extends previous work beyond steady-state considerations. The most striking result is that in all cases considered, dynamically efficient and inefficient economies in autarkic steady-state, migration leads to temporary welfare losses in both countries. In all cases, the transition path is characterized by temporary dynamic inefficiency in one country.All correspondence to Doris Geide-Stevenson. We would like to thank an anonymous referee for very helpful comments. We are responsible for any remaining errors. Responsible editor: Christoph M. Schmidt.