Immigrants' Wage Growth and Selective Out-Migration

31 Pages Posted: 22 Nov 2014

See all articles by Govert E. Bijwaard

Govert E. Bijwaard

Netherlands Interdisciplinary Demographic Institute (NIDI); Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); IZA Institute of Labor Economics

Jackline Wahba

University of Southampton, Department of Economics; IZA Institute of Labor Economics

Abstract

This paper examines immigrant wage growth taking into account selective out-migration using administrative data from the Netherlands. We also take into account the potential endogeneity of the immigrants' labor supply and their out-migration decisions on their earning profiles using a correlated competing risk model, but we also use standard estimations as done in previous literature. We distinguish between two types of migrants: labor and family migrants given their different labor market and out-migration behavior. We find that simple models lead to biased estimates of the wage growth of immigrants. Controlling for the selective out-migration and endogeneity of labor supply, we find that labor out-migrants are positively selected but family out-migrants are negatively selected. Furthermore, the findings underscore the importance of taking into account the endogeneity of labor supply and out-migration when estimating immigrants' wage growth.

Keywords: migration dynamics, labor market transitions, competing risks, immigrant assimilation, income growth

JEL Classification: F22, J61, C41

Suggested Citation

Bijwaard, Govert and Wahba, Jackline, Immigrants' Wage Growth and Selective Out-Migration. IZA Discussion Paper No. 8627, Available at SSRN: https://ssrn.com/abstract=2529336

Govert Bijwaard (Contact Author)

Netherlands Interdisciplinary Demographic Institute (NIDI) ( email )

P.O. Box 11650
NL-2502 AR The Hague
Netherlands
+31 70 3565224 (Phone)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

IZA Institute of Labor Economics

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

Jackline Wahba

University of Southampton, Department of Economics ( email )

Southampton, SO171BJ
United Kingdom
+44 23 8059 3996 (Phone)

HOME PAGE: http://https://sites.google.com/site/jackiewahba/

IZA Institute of Labor Economics

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

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