Lecture 3

Question 1

Theoretical prediction on the initial earnings disadvantage of immigrants

Answer 1

they lack host country specific knowledge: lack relevant human capital, have less information about the host country’s customs and
practices, relative shorter time on the host country’s labour market
makes them less attractive as workers

Question 2

What is the Theoretical prediction on time in host country (explain carefully)

Answer 2

As time in the host country increases the
productivity of immigrant workers will increase. Immigrants gain host country specific knowledge and labour market
experience and their productivity increases.

Question 3

Theoretical prediction on : Immigrants’ earnings grow faster than natives’

Answer 3

The human capital investments are larger for immigrants than for natives. Natives get one year older. Immigrants get one year older, but also have
one more year in the host country.

Question 4

Chiswick’s model of assimilation

Answer 4

W is the hourly wage of individual i
– X controls for individual variables (years of education, place of residence etc.)
– Age is the age of the person at the time of observation
– I is equal to 1 if the person is an immigrant and 0 if native (dummy variable)
– YSM measures the number of years since migration (0 for natives)
– εi is the error term

Question 5

Borjas’ extension of the assimilation model

Answer 5

= age, X = control variables, y = years since migration
* C are dummy variables for cohort, measuring the cohort effects
* 𝜋𝜋 is the period effect, i.e., dummy variables for the year of observation

Question 6

What can we expect about assimilation patterns for refugees compared to
other migrants

Answer 6

Reason for migration has implications both for initial earnings
disadvantage and accumulation of host-country specific human capital. Expect that refugees start a lower earnings and employment rate than
other immigrants. Can have both faster or slower assimilation rate.

Question 7

• It seems like immigrants do not catch up with natives. At least not those who
  arrived more recently. The assimilation models do not provide a clear answer
  to why this is happening. Can other theories fill this gap?

Answer 7

Human capital theory. Labour market discrimination. Ethnic segregation.

Question 8

Language is a special type of human capital for immigrants. What is it important for?

Answer 8

Arguably very important for immigrants’ assimilation, both in terms of
higher employment probability and higher earnings. Host-country specific

Question 9

How can we then estimate the effect of language ability on the assimilation
process?

Answer 9

Ideally, we want to observe the same individual when not having acquired
language abilities and when having acquired language abilities.