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Reinterpreting the performance of immigrant wages from panel data

Author

Listed:
  • Derek Hum
  • Wayne Simpson
Abstract
Immigrants differ from the native born in terms of unobserved factors, such as motivation, and observed factors, including those related to the interruption of labour market activity and earning capacity, which may bias estimates of immigrant integration. Using panel data from the Survey of Labour and Income Dynamics, we show that using potential experience, rather than actual experience, exaggerates estimates of the disruption and recovery caused by immigration. More importantly, we find support for omitted variables bias, arising from unobserved fixed effects. Instrumental variable estimates for both pooled and separate samples of immigrant and native born men demonstrate a wage disadvantage for immigrants upon entry that persists through their lifetime. Standard estimates of a modest wage advantage for the children of immigrants also suffer from omitted variables bias arising from unobservables. Contrary to most of the literature to date, our instrumental variable estimates which allow for unobservable fixed effects suggest that immigrants never catch up to otherwise comparable native born workers, but their children do just as well. Copyright Springer-Verlag 2004

Suggested Citation

  • Derek Hum & Wayne Simpson, 2004. "Reinterpreting the performance of immigrant wages from panel data," Empirical Economics, Springer, vol. 29(1), pages 129-147, January.
    • Handle: RePEc:spr:empeco:v:29:y:2004:i:1:p:129-147
    DOI: 10.1007/s00181-003-0193-1
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    More about this item

    Keywords

    Immigration; wages; panel data; J40; C23; F22;
    All these keywords.

    JEL classification:

    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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