Unemployment and Earnings Assimilation of Immigrants

The regional unemployment elasticity of annual earnings for non‐OECD immigrants is found to be more than three times larger than for natives, using micro data covering all immigrants in Norway in 1990 and a random sample of natives. The decline in relative earnings of non‐OECD immigrants from 1980 to 1990 can largely be explained by the stronger impact of rising unemployment on immigrant earnings. These results highlight the importance of controlling for different period effects caused by fluctuating unemployment in panel studies of earnings assimilation among immigrants.