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.     

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.     

Assimilation of immigrants: Implications for human capital accumulation of the second generation

Immigrants assimilate in various dimensions at different rates. Moreover, in each of these dimensions they assimilate at rates that may differ from those of their children. The purpose of this paper is to examine how the pace of assimilation of immigrants in various dimensions affects the rate of human capital accumulation of immigrant children. It is argued that rapid assimilation in certain dimensions serves to increase the rate of human capital accumulation of the second generation, while in other dimensions it may have the opposite effect.I thank Christoph Schmidt, Peter Schaeffer, and two anonymous referees for helpful comments. 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.     

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.     

Analysis of child labour in Peru and Pakistan: A comparative study

This paper analyses child labour participation and its key determinants using data sets from Peru and Pakistan. The results include tests of the ‘Luxury’ and ‘Substitution’ hypotheses that play key roles in recent studies on child labour and child schooling. The results reject both hypotheses in the context of child labour in Pakistan and suggest that income and related variables do not have the expected negative effect on children's work input. Rising wages of adult female labour in Pakistan, and falling adult male wage in Peru lead to increased participation of children in the labour market. The results on the combined country data formally establish the presence of strong individual country effects in the estimated regressions. For example, ceteris paribus, a Peruvian child is more likely to experience schooling than a Pakistani child. However, both countries agree on the positive role that adult female education and infrastructure investment in basic amenities can play in discouraging child labour and encouraging child schooling. Received: 24 August 1998/Accepted: 10 March 1999     

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.     

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.     

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     

Joint decisions on household membership and human capital accumulation of youths. The role of expected earnings and local markets

This paper analyses the effects of expected earnings and local markets conditions on the behaviour of young adults with high school diplomas. Decisions to either remain in the parental home or form a new household are modelled jointly with those of either gaining work experience or investing in a university education. Expected lifetime earnings are found to play a crucial role in determining the choice of studying and residing with parents. Poor labour market opportunities discourage young people from working and induce them to study. The cost of housing greatly influences the choice of working and leaving the parental home. Received: 23 March 2001/Accepted: 26 November 2001 All correspondence to Gianna Claudia Giannelli. Helpful comments by two anonymous referees are gratefully acknowledged. Responsible editor: John F. Ermisch.     

The impact of local labour markets on investment in further education: Evidence from the England and Wales youth cohort studies

The paper focuses on the individual's choice of activity on completion of compulsory schooling – to remain in full-time education or to seek employment – and the factors influencing this decision. Information from the England and Wales Youth Cohort Studies, coupled with labour market data, is used to estimate of logit model of choice and assess the role played by social and market factors. The results show that labour market conditions play an influential role in determining outcomes, particularly in the case of young males with weaker academic qualifications. Consistent with the time-series evidence, we find that participation rates in further education for both males and females are positively related to the unemployment rate in the local labour market, the effects being greater at times of economic recession when unemployment rates are rising. Received: 5 May 1997/Accepted: 17 July 1998     

The effect of schooling on teenage childbearing: evidence using changes in compulsory education laws

A strong negative correlation is often found between schooling and teenage childbearing. The question at the center of this research is whether this correlation represents a causal relation. This paper uses changes in compulsory schooling laws in Great Britain and Northern Ireland to purge schooling estimates of biases resulting from individual-specific error components correlated with education. The results suggest that increased schooling does appear to reduce the incidence of teenage childbearing. Moreover, the results serve to highlight an important change in the impact of schooling on teenage childbearing following the legislation on contraception in the late 1960s.     

Changing fertility rates in developed countries. The impact of labor market institutions

During the last two decades fertility rates have decreased and have become positively correlated with female participation rates across OECD countries. I use a panel of 23 OECD nations to study how different labor market arrangements shaped these trends. High unemployment and unstable contracts, common in Southern Europe, depress fertility, particularly of younger women. To increase lifetime income though early skill-acquisition and minimize unemployment risk, young women postpone (or abandon) childbearing. Further, both a large share of public employment, by providing employment stability, and generous maternity benefits linked to previous employment, such as those in Scandinavia, boost fertility of the 25–29 and 30–34 year old women.Financial help from a CRB grant from the University of Illinois is gratefully acknowledged. I would like to thank Carles Boix, Barry Chiswick, Carmel Chiswick, Evelyn Lehrer, three anonymous referees and seminar participants at ESPE 2000 (Bonn), Illinois Economic Meetings 2000 (Chicago), Simposi dAnalisi Economica 2000 (Barcelona), 2001 Winter meetings of the Econometric Society in New Orleans, ESPE 2001 (Athens), Braga (Portugal), University of Chicago, De Paul University, PAA 2002 (Atlanta) for helpful comments; Gosta Esping-Andersen for providing some data and Cristina Mora for excellent research assistance. Responsible editor: Junsen Zhang.     

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.     

The impact of cash-benefit reform on parents’ labour force participation

This paper evaluates the impact of a recent Norwegian family-policy reform. The reform provides benefits of up to NOK 3,000 (approximately € 400) per month to families with one- to three-year-old children, who do not utilize state-subsidized day-care centres. We investigate the reforms effect on parents labour force participation. We find that, on average, the reform reduced womens labour force participation and increased the specialization of work between couples. We find that the effect of the reform depends on womens schooling. Specifically, the labour force participation of highly educated mothers fell by more than that of mothers with less education.I am grateful to Associate Professor Espen Bratberg and Professor Alf Erling for their valuable comments. My special thanks to Kjell Vaage, Arild Aakvik and Afsane Bjorvatn for helpful suggestions. This paper was presented in a seminar at the Department of Economics, University of Bergen, Norway. I am thankful to the participants of the seminar for their positive feedback. The paper has also benefited from the reports given by three anonymous referees. I am also thankful to Professor Heather Joshi for helpful remarks on the paper. Responsible editor: Christoph M. Schmidt.     

On the ranking uncertainty of labor market wage gaps

Using a log-wage model, Horrace and Oaxaca (2001) propose estimators of the gender wage gap across industry classifications. One estimator involves the maximum over sample estimates of population parameters, and inference on this estimator follows with the implicit assumption that the sample maximum equals the population maximum. This paper proposes inference procedures for this estimator that relax this assumption. Specifically, multiple comparisons with the best methods are used to construct simultaneous confidence intervals for industry wage gaps. Using data on fourteen industry classifications, inference experiments indicate that differences in gender wage gaps across industries are insignificant at the 95% level.I would like to thank Dan Hamermesh, Dan Houser, Jason Hsu, Tom Kniesner, Ron Oaxaca, and Peter Schmidt for comments. All errors are mine. The generous support of the Office of the Vice Chancellor of Syracuse University is gratefully acknowledged. Responsible editor: Daniel S. Hamermesh.     

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.     

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     

Health effects of child work: Evidence from rural Vietnam

We test whether work in childhood impacts on health. We focus on agricultural work, the dominant form of child work worldwide. Data are from the Vietnam Living Standards Survey, 1992–93 and 1997–98. We correct for both unobservable heterogeneity and simultaneity biases. Instruments are land holdings and commune labour market and school quality indicators. We examine three indicators of health: weight-for-age Z-score; reported illness; and, height growth. There is clear evidence of a healthy worker selection effect. We find little evidence of a contemporaneous negative impact of child work on health but, particularly for females, work undertaken during childhood raises the risk of illness up to five years later. For boys, the risk is increasing with the period of time in work. There is no evidence that work impedes the growth of the child. This work was undertaken as part of the Understanding Children's Work project, an inter-agency program between the International Labour Organisation, UNICEF and the World Bank. The views expressed are those of the authors alone and do not reflect positions of the sponsoring organisations. We are grateful to the Government of Vietnam for permission to use the data. We thank two referees for very helpful comments. Responsible editor: Alessandro Cigno.     

The socioeconomic consequences of young women's childbearing: Reconciling disparate evidence

Recent studies have begun to examine rigorously the links between early childbearing and subsequent socioeconomic status. Prominent in this literature has been a set of analyses that have used sibling fixed effects models to control for omitted variables bias. These studies report that the siblings difference procedure leads to smaller estimates of the effects of teen fertility than does standard regression analysis. While it is well known that the siblings fixed effects procedure makes strong assumptions regarding the type of omitted variables and is not necessarily robust to alternative assumptions, the assumptions of the procedure have not been explicitly examined. This paper uses 1979–1992 data from the National Longitudinal Survey of Youth to compare estimates of the income and education consequences of teenage and young adult fertility from standard regression and siblings fixed effects models with estimates from more general, alternative siblings models. Received: 19 January 1998/Accepted: 6 April 1999