Racialized Labour Market Incorporation? African Immigrants and the Role of Education‐Occupation Mismatch in Earnings

U.S. immigration policy debates increasingly center on attracting highly‐skilled immigrants. African immigrants, in particular, exhibit high levels of over‐education. But questions remain about whether African immigrants’ skills are appropriately utilized in the U.S. labour market. This paper uses U.S. Census and American Community Survey data to determine whether Africans’ over‐education leads to a corresponding wage disadvantage. I also investigate whether search and match, imperfect transferability, or queuing theory describes African immigrants’ wage outcomes. I find that, while African and Asian immigrants have similarly high rates of college education and over‐education, Africans experience significantly larger wage disadvantages due to over‐education. African immigrants’ low wages are closer to that of U.S. and Caribbean‐born blacks indicating that queuing theory describes their wage disadvantage. These findings suggest the need for policy addressing racial disparities in the labour market rather than new immigration policy.     

FINANCIAL DEVELOPMENT AND WAGE INEQUALITY: THEORY AND EVIDENCE

We argue that financial market development contributed to the rise in the skill premium and residual wage inequality in the United States since the 1980s. We present an endogenous growth model with imperfect credit markets and establish how improving the efficiency of these markets affects modes of production, innovation, and wage dispersion between skilled and unskilled workers. The experience of U.S. states following banking deregulation provides empirical support for our hypothesis. We find that wages of skilled workers increased by between 0.5% and 6.3% following deregulation while those of unskilled workers fell by between 3.5% and 8.7%. Similarly, residual (or within‐group) inequality increased; the 90–50 percentile ratio of residuals from a Mincerian wage regression and their standard deviation increased by 4.2% and 1.7%, respectively. (JEL E25, J31, G24)     

The worldwide market for skilled migrants: can Australia compete?

"The purpose of this article is to...[analyze] the relative importance of internal and external factors on the demand for skilled immigration visas to Australia. Our objectives are to determine how the size of the pool of potential migrants is influenced by factors such as relative economic conditions and U.S. and Canadian immigration policies and to determine what implications these factors have on the relative quality (skill level) of potential migrants to Australia. Our results indicate that the demand for skilled immigration visas to Australia is related to the number of immigrants accepted by the United States and Canada as well as employment possibilities in Australia. We do not find a relationship between U.S. and Canadian policy and the relative quality of the applicant pool."     

The Effects of Educational-Occupational Mismatch on Immigrant Earnings in Australia,with International Comparisons1

This paper examines the way immigrant earnings are determined in Australia. It uses the overeducation/required education/undereducation framework and a decomposition of the native-born/foreign-born differential in the payoff to schooling. This decomposition links overeducation to the less-than-perfect international transferability of immigrants’ human capital, and undereducation to favorable selection in immigration. Comparisons are offered with findings from analyses for the U.S. and Canada to enable assessment of the relative impacts of favorable selection and the limited international transferability of human capital to the lower payoff to schooling for the foreign born. The sensitivity of the results of the decomposition to several measurement issues is assessed.     

A DUAL DEFINITION FOR THE FACTOR CONTENT OF TRADE AND ITS EFFECT ON FACTOR REWARDS IN US MANUFACTURING SECTOR

We introduce a dual definition of the Factor Content of Trade (FCT) using the concept of the Equivalent Autarky Equilibrium. Estimating a symmetric normalized quadratic revenue function for the U.S. manufacturing sector between 1965 and 1991, we find that the FCT for capital is positive, while the FCT for skilled and unskilled labor is negative, suggesting that the Leontief Paradox is not present. Then the growth rate of the factor rewards is decomposed to the FCT, endowments, and technological change effects. We find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor. (JEL F11, F16, J31)     

Recent Immigration to Canada and the United States: A Mixed Tale of Relative Selection

Using large‐scale census data and adjusting for sending‐country fixed effect to account for changing composition of immigrants, we study relative immigrant selection to Canada and the U.S. during 1990–2006, a period characterized by diverging immigration policies in the two countries. Results show a gradual change in selection patterns in educational attainment and host‐country language proficiency in favor of Canada as its post‐1990 immigration policy allocated more points to the human capital of new entrants. Specifically, in 1990, new immigrants in Canada were less likely to have a B.A. degree than those in the U.S.; they were also less likely to have a highschool or lower education. By 2006, Canada surpassed the U.S. in drawing highly educated immigrants, while continuing to attract fewer low‐educated immigrants. Canada also improved its edge over the U.S. in terms of host‐country language proficiency of new immigrants. Entry‐level earnings, however, do not reflect the same trend: Recent immigrants to Canada have experienced a wage disadvantage compared to recent immigrants to the U.S., as well as Canadian natives. One plausible explanation is that while the Canadian points system has successfully attracted more educated immigrants, it may not be effective in capturing productivity‐related traits that are not easily measurable.     

Getting Ahead in the Capitalist Paradise: Migration from China and Socioeconomic Attainment in Colonial Hong Kong1

This article examines the initial labor market outcome and the subsequent mobility process of Chinese immigrants in Colonial Hong Kong using complete work history data and event history modeling. Contrary to the rhetoric that Hong Kong is a capitalist paradise for adventurers, the data showed that immigrants were penalized in their initial class placement, subsequent mobility, and current income attainment. Differences in educational attainment and the lack of transferability of pre‐migration human capital partly explained the attainment gap between immigrants and the natives. Yet the disadvantage of immigrants was also embedded in the local economic structure. The process of deindustrialization significantly lowered the chance of immigrants getting good first jobs when entering the labor market. Moreover, since deindustrialization benefited the natives by providing them with more opportunities in the service sector, it inadvertently widened the gap in upward mobility chances between natives and immigrants.     

The Occupational Assimilation of Hispanic Immigrants in the U.S.: Evidence from Panel Data1

This study focuses on the occupational component of the labor market adjustment of Hispanic immigrants. The author asks whether Hispanic immigrants assimilate with natives and what factors influence occupational attainment. The findings suggest that years since migration narrow the socioeconomic gap between Hispanic immigrants, their U.S.‐born Hispanic counterparts, and non‐Hispanic whites. The level of human capital affects the rate of occupational mobility and determines whether convergence occurs in the groups’ socioeconomic occupational status. The occupational status of Hispanic immigrants with low human capital remains fairly stable and does not converge with that of non‐Hispanic whites. However, those with high human capital experience upward occupational mobility. In part, their occupational assimilation is driven by the acquisition of human capital among younger Hispanic immigrants.     

LABOR MARKET PERFORMANCE EFFECTS OF DISCRIMINATION AND LOSS OF SKILL

We examine the impact of discrimination on labor market performance when workers are subject to a risk of losing skills during an unemployment experience. Within a search and matching framework, we show that both natives and immigrants are affected by discrimination. Discrimination in one sector has positive spillovers, inducing employment to increase in the other sector and the effect on labor market performance therefore depends on whether discrimination is present in only one sector or in both. Discrimination may induce workers to train more or less than natives after having lost their skills, dependent upon in which sector there is discrimination. Net output tends to be most negatively affected by discrimination among high‐skilled workers. (JEL J15, J31, J61, J64, J71)     

How to Reverse the Italian Brain Drain: A Master Class from Australia

This article discusses the limits of Italian immigration policies and their effects on the Italian market of highly skilled individuals. Italian statutory provisions aimed at regulating immigration focus on limiting immigration without a reasoned distinction being made between skilled and unskilled immigrants. The first part of the article argues that a combination of historical and sociological factors makes Italy uncompetitive in the global market of highly skilled individuals. The second part suggests two pilot schemes for policies that might help in addressing the issue. First, the introduction of a medium‐/long‐term visa for highly skilled individuals, and second, the establishment of private multinational universities modelled on the European Institute (EI) in Florence. These new institutions would open up the academic job market to overseas researchers and, at the same time, would provide a more solid base for the retrieval of Italian academics working abroad.     

Is there any merit to the merit-based immigration system? What Sub-Saharan African immigrant labor and housing market outcomes tell us about U.S. economic and immigration systems

For decades, U.S. immigration policy debates have centered on creating a merit-based system limiting entry to high-skilled immigrants. Yet the emphasis on merit-based immigration ignores the fact that high-skilled immigrants already enter the United States in merit-based immigration assume high-skilled immigrants benefit the U.S. economy because they are better able than low-skilled immigrants to translate skills into economic success. Using Sub-Saharan (Black) African immigrants' labor and housing market outcomes, I show that meritocracy only partially explains U.S. labor and housing outcomes, leaving a merit-based system unlikely to address America's economic needs. The majority of immigrants to the U.S. are non-White, and racial discrimination in the labor market results in occupational and wage disadvantages in the U.S. Due to the public charge rule, high skilled immigrants may be less likely to get their visas renewed or green card applications approved because of these labor market disadvantages. Without stable visa status, high-skilled immigrants will be less likely to make long-term economic investments in the United States—an important way of contributing to the U.S. economy. Together, research indicates that U.S. immigration reform will not work without first enacting policy addressing racial disparities in economic systems.     

The effect of immigration on the earnings of native-born workers: Evidence from Australia

No consensus has been reached by previous studies on the impact of immigration on the earnings of natives. Using data from the Australia's 2001 Census of Population and Housing an individual-level earnings function is estimated by including the fraction of immigrants in a given skill group relative to total employment in that skill group as one of the independent variables. Using employees’ occupation and level of education as proxies for skill, the results indicate that generally immigrants have a significant positive effect on earnings of natives. The overall findings suggest that the increase in supply of labour due to immigration is offset by higher demand for labour and hence positive effect on native earnings.     

Immigration and the earnings of youth in the U.S.

"This article reports findings that have emerged from an effort made at statistically measuring the effects of immigration on the earnings of U.S.-born youth. The presence of immigrants arriving before 1965 has a positive impact on youth earnings. Recently arrived immigrants impact negatively, however. These results are consistent with recent findings that the skill level of immigrants arriving within the last two decades is lower relative to that of immigrants arriving earlier. The results also show that the negative effects diminish as the youth ages, reflecting skill acquisition and job mobility of the young worker into jobs less vulnerable to competition from immigrant workers."     

Who “They” Are Matters: Immigrant Stereotypes and Assessments of the Impact of Immigration

We investigate the relationship between stereotypes of immigrants and assessments of the impact of immigration on U.S. society. Our analysis exploits a split‐ballot survey of registered voters in Ohio, who were asked to evaluate both the characteristics of one of four randomly assigned immigrant groups and perceived impacts of immigration. We find that associations between impact assessments and stereotypes of Middle Eastern, Asian, and European immigrants are weak and fully attenuated by control covariates. By contrast, this relationship for Latin American immigrants is strong and robust to controls, particularly in the areas of unemployment, schools, and crime. Our findings suggest that public views of the impacts of immigration are strongly connected to beliefs about the traits of Latin American immigrants in particular.     

UNEMPLOYMENT RISK AND COMPENSATING DIFFERENTIALS IN NEW JERSEY MANUFACTURING

We present evidence that low-skill workers received larger compensating differentials than more skilled workers when facing unanticipated unemployment in an era without unemployment insurance. Using information from surveys of New Jersey workers conducted during the 1880s, we test the theory of compensating wage differentials. We find that workers who faced a higher probability of predictable unemployment received compensating differentials and that the size of the differential differed across industries and skill levels. With few firm- or industry-specific skills, unskilled workers were less subject to "informational capture" than skilled workers who had more but less easily transferable human capital. (JEL N31 )     

TRADE,GEOGRAPHY AND THE SKILL PREMIUM IN U.S. MANUFACTURING

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period. (JEL F12, F16, L60)     

Occupational Mobility Among Legal Immigrants to the United States1

Using data from the New Immigrant Survey Pilot, which follows immigrants for one year after receiving green cards, occupation in the U.S. is compared with that of the last job abroad. Fifty percent of immigrants experience downgrading. Among the highest‐skilled immigrants from Latin America and the Caribbean, more than three‐fourths end up in lower‐skilled jobs than what they had abroad. Human capital acquired in Latin America and the Caribbean is valued less than that from Europe, Australia, and Canada in the U.S. labor market, while immigrants with some U.S. education can increase the returns to that acquired previously abroad.     

INDUSTRIAL DYNAMICS AND THE NEOCLASSICAL GROWTH MODEL

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model. ( JEL E13, J20, 030)     

Are the Consequences of Experiencing Discrimination the same for Immigrants of Differing Socio‐Economic Status in Japan?

Scholars have identified the negative effects of discrimination on immigrants’ well‐being by focusing on the nature of discrimination. However, whether the social status of immigrants influences the effects of discrimination on well‐being remains unclear. To answer this question, this study extends current research by focusing on how immigrants’ occupational status moderates the effects of discrimination on well‐being. Based on two sets of survey data, the results show that skilled immigrants are more likely to be negatively affected by discrimination than are unskilled immigrants. This phenomenon might be explained by the immigrants’ comparisons of discrimination experiences prior to migration. The findings suggest that to explain the mechanism underlying discrimination's negative effect on immigrants’ psychological well‐being, researchers should pay more attention to immigrants’ characteristics and their experiences before migration. The results of this study have important implications for immigration policy in Japan and other ethnically homogeneous countries, such as South Korea.     

Central American and Mexican immigrant characteristics and economic incorporation in California

"Data compiled from the 1980 U.S. Census and other sources are used in this article to demonstrate the distinctiveness of Central American immigration.... Comparisons between Central American and Mexican immigrants in California reveal substantial differences between the two groups in their age structure, sex ratio, and human capital characteristics." The emphasis of the study is on the differences concerning incorporation of these migrant groups into the Californian economy.