Local Unemployment and the Earnings Assimilation of Immigrants in Norway

Erling Barth, Bernt Bratsberg () and Oddbjørn Raaum

No 19/2002, Memorandum from Oslo University, Department of Economics

Abstract: Labour market outcomes of immigrants and natives are affected differently by macroeconomic conditions. In particular, we show that earnings of immigrants in Norway from outside the OECD area are more sensitive to local labour market conditions than are earnings of natives. Failure to account for such differences may bias estimates when periods of rising or declining unemployment are important to identify assimilation effects on immigrant earnings. We show that this is the case for Norway: An observed drop in relative earnings of non-OECD immigrants after about 10 years in the host country disappears when we account for differential business cycle effects on immigrant and native earnings. The empirical evidence also reveals that local labour market conditions impact the rate of the earnings assimilation. We interpret the effect of unemployment on the assimilation rate in terms of a combined "wage curve effect” and a “learning effect” on the rate at which immigrants acquire country-specific human capital.

Keywords: immigrants; unemployment; Labour market; assimilation (search for similar items in EconPapers)
JEL-codes: J61 J82 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2003-06-17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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