Labor Market Segmentation and the Earnings of German Guestworkers

2010

This paper provides new information on the integration of the children of immigrants, the immigrant "second generation", in Germany. Exploiting the 2005 Mikrozensus, the first dataset to allow the full disaggregation of different immigrant origin groups in Germany, this paper particularly focuses on the effect of the context of reception -the legal, social and economic circumstances of migration -on second generation outcomes. By comparing the children of guest workers to the children of ethnic German immigrants, I capture greater variation in the context of reception than most current research. In addition, I also examine the associations between German citizenship and intermarriage and the labor force participation, employment, and occupational status of the children of immigrants in Germany. Most second generation men have much higher unemployment, and lower occupational status scores, than native Germans, even after controlling for human capital. Disadvantage is less pronounced among second generation women. Although second generation women benefit from a positive context of reception, German citizenship, and intermarriage, second generation men do not. These findings suggest important variation across and within immigrant origin groups, as well as gender differences, in second generation labor market integration.

This study uses the concept of stochastic frontiers for analyzing the income disparity between ethnic groups in West Germany. Estimation of a potential rather than an average earnings function increases the explanatory power of the human capital approach and allows for detecting discrimination as well as assimilation processes. The empirical results im-ply that the human capital gap explains more than 75% of the wage differential between natives and foreign nationalities in Germany. As for ethnic Germans migrants, their wage disparity can be explained by 50% with human capital differentials. Surprisingly, only small differences could be observed with regard to the question of earnings efficiency. On an average, inhabitants as well as immigrants transformed about 85% to 90% of their potential income into actual earnings. The sources for the individually diverging efficiency ratios are not well understood, with discrimination only found for ethnic Germans from Eastern Europe. Somewhat...

2011

This study compares the outcomes of male foreign workers from different East and West European countries who entered the German labour market between 1995 and 2000, with those of male German workers. We find that the immigrant-native wage gap differs significantly between nationalities: the differential is largest for workers from Poland (-44 percent) and the Czech Republic (-38 percent) and by far the lowest for Spaniards (-8 percent). Results from an Oaxaca/Blinder type decomposition show that unfavourable characteristics (compared with German workers) contribute significantly to the explanation of the immigrant wage gap. This is especially true for workers from Poland, Portugal, Italy and Slovakia. For all other countries, it is observed that the coefficients effect dominates. It can therefore be concluded, that immigrants are generally affected by "discrimination". Comparing the effects for workers from East European EU member countries with those for other nationality groups, it emerges that East Europeans are not worse off than other nationalities. The most pronounced "discrimination" is found for immigrants from non-EU states in Eastern Europe. To analyse the importance of segregation into sectors, we take a closer look at construction and hotels & restaurants and find that the coefficients effect still adds most to the explanation of the raw wage differential between foreigners and Germans. This indicates that segregation into sectors does not significantly contribute to the "discrimination" of foreigners. Additional information is obtained from quantile decompositions. Coefficient effects (in absolute values) decrease for the majority of countries. Thus, discrimination appears to be more pronounced at low wage levels. Moreover, this evidence suggests sticky floors rather than glass ceilings.

2013

This Discussion Paper is issued within the framework of IZA’s research area Mobility and Flexibility of Labor. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results ...

2010

This paper examines the effects of neighborhood characteristics on wages and unemployment probabilities of first-and second-generation migrants in Germany, paying particular attention to the regional concentration of immigrant minorities. We take advantage of the opportunity to combine individual-level data from the German Socio-Economic Panel (SOEP) with economic and demographic postcode-level data from German administrative records. We find that a higher share of migrants in the neighborhood results in a wage increase for native workers -even after controlling for non-random sorting of migrants into neighborhoods. We do not find an effect of the share of foreigners in the neighborhood on migrants' wages. Our findings further suggest that the regional concentration of migrants in postcode areas does not affect individual unemployment probabilities.

The Quarterly Review of Economics and Finance, 1997

This paper uses the immigration sample of the German Socioeconomic Panel to analyze the earnings and unemployment assimilation of ethnic Germans who entered West Germany within the last IO years. The empirical analysis suggests that there is no earnings dt;fferential between immigrants from eastern Europe and comparable east Germuns at the time of immigration. However, with longer time of residence the earnings of former east Eurqeans rise faFter than those of east Germans. Migrants horn Poland arti the former USSR have higher unemployment risks than those from East Germany or Romania. Ethnic networks are shown to be very useful for a success-&l integration into the labor market.

2003

This Discussion Paper is issued within the framework of IZA’s research area Mobility and Flexibility of Labor. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research resul...

Journal of Population Economics, 2003

In this paper we examine the process of out-migration and investigate whether cross-sectional earnings assimilation results suffer from selection bias due to out-migration. Our 14 year longitudinal study reveals that emigrants are negatively selected with respect to occupational prestige and to stable full time employment. Our results show no selectivity with respect to human capital or gender. The likelihood of

International Journal of Manpower, 2006

Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants * This paper focuses on the entrepreneurial undertaking of immigrants and natives in Germany. We first study factors that affect the sorting of individuals into self-employment and then we investigate whether self-employment has a differential effect on the wages of individual workers and can lead them to economic success. We employ recent data from the German Socioeconomic Panel that allow us to identify and compare four distinct groups: West Germans, East Germans, guestworkers, and ethnic Germans. We find that the probability of self-employment increases significantly with age for all groups. For immigrants, the years-since-migration exhibits a U-shape. During the first years since migration the likelihood of self-employment decreases over time. However, when immigrants have accumulated more years of residence in Germany, the likelihood is increasing again. This suggests that once immigrants have overcome the initial adjustment shock, self-employment is a means to take advantage of the opportunities of the host country and achieve a higher socioeconomic standing. Among immigrants, guestworkers are twice as likely to choose selfemployment as ethnic Germans. Further, we find that self-employment is a lucrative choice only for Germans who are in the upper end of the income distribution. "Rich" self-employed Germans enjoy a wage premium compared to their salaried counterparts. However, immigrants are able to traverse the socioeconomic gap through self-employment, irrespective of the part of the distribution they are at. Self-employed immigrants earn 22% more than the salaried immigrants.

SSRN Electronic Journal, 2000

This series presents research findings based either directly on data from the German Socio-Economic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.