Friday, December 6, 2013

How do immigrants assimilate in job search?

How immigrants integrate into the native population has been a concern in many countries for a long time. Typically, this has been done by looking at how they marry, they educate themselves, how much they earn, and how they conduct criminal activities. Their labor market behavior, particularly how they search for a job, is less studied.

Audra Bowlus, Masashi Miyairi and Chris Robinson fill that gap by applying a search model to Canadian data. Two crucial parameters in those models are the job arrival and job destruction rates, which the authors allow to differ between natives and immigrants. In addition, they add a switching process wherein an immigrant stochastically acquires the characteristics of a native. This allows to determine that it takes on average 13 years for this to happen, quite a long time I think. More interesting, however, is that immigrants get significantly fewer offers, 36% lower when unemployed and 93% lower when employed, and they lose their jobs faster as well. This means that if an immigrant transitions to another job, it is almost always through unemployment. As a natural consequence, their wages catch up very slowly with that of natives. In fact, the search process accounts for more than half of the wage gap.

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