A Reevaluation of the Role of Family in Immigrants' Labor Market Activity: Evidence from a Comparison of Single and Married Immigrants

34 Pages Posted: 26 May 2009

See all articles by Sarit Cohen-Goldner

Sarit Cohen-Goldner

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics

Chemi Gotlibovski

Academic College of Tel-Aviv Yafo

Nava Kahana

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics

Abstract

Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single immigrants. The logic underlying this alternative method states that if credit constraints are binding, then only married immigrants can cross-finance their investment within the family. In order to overcome potential selection bias that would arise if unobserved characteristics that affect the marital status of the individual also affect his/her labor market outcomes, we construct a difference-in-differences estimator that exploits variation in the labor market outcomes of married and single natives. Implementation of this method using US and Israeli data leads to a rejection of the FIH in both countries.

Keywords: family investment model, labor supply

JEL Classification: J22, J61

Suggested Citation

Cohen-Goldner, Sarit and Gotlibovski, Chemi and Kahana, Nava, A Reevaluation of the Role of Family in Immigrants' Labor Market Activity: Evidence from a Comparison of Single and Married Immigrants. IZA Discussion Paper No. 4185. Available at SSRN: https://ssrn.com/abstract=1409289

Sarit Cohen-Goldner (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 531 8948 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chemi Gotlibovski

Academic College of Tel-Aviv Yafo ( email )

Israel

Nava Kahana

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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