Immigrant-native gap in risk and time preferences in Germany: Levels, socio-economic determinants, and recent changes

43 Pages Posted: 11 Feb 2022

See all articles by Sumit S. Deole

Sumit S. Deole

Technical University of Dortmund; Global Labor Organization (GLO)

Marc Oliver Rieger

University of Trier

Date Written: November 24, 2021

Abstract

We present new descriptive evidence on the immigrant-native gap in risk and time preferences in Germany, one of the most preferred host countries for immigration. Using the recent waves of the Socio-Economic Panel (SOEP) dataset, we find that the immigrant-native gap in risk preferences has widened for recent immigration cohorts, especially around the 2015 European Refugee Crisis. We attribute the recent widening to decreased assimilation rates of new immigrants caused by a reduced integration due to sudden increases in immigrants flows from culturally diverse parts of the world, particularly around the year 2015. We also find that the immigrant-native gap varies across different migrant groups: "Opportunity seekers", which we define as economic immigrants who intend to stay in Germany only temporarily, are very similar in their risk preferences to natives. Other immigrants, however, are substantially more risk-averse than natives. A smaller gap in risk preferences is also found among migrants who are female, highly educated, proficient in the host language, self-employed and working in predominantly high-skilled jobs. Concerning time preferences, although a noticeably large immigrant-native gap is evident, the gap is not found to vary across most individual-level socio-economic variables.

Keywords: Risk aversion; time discounting; immigration; assimilation

JEL Classification: J61, D91

Suggested Citation

Deole, Sumit S. and Rieger, Marc Oliver, Immigrant-native gap in risk and time preferences in Germany: Levels, socio-economic determinants, and recent changes (November 24, 2021). Available at SSRN: https://ssrn.com/abstract=3970573 or http://dx.doi.org/10.2139/ssrn.3970573

Sumit S. Deole

Technical University of Dortmund ( email )

Friedrich-Wöhler-Weg 6
Dortmund, 44227
Germany

Global Labor Organization (GLO) ( email )

Collogne
Germany

HOME PAGE: http://glabor.org/user/sumitdeole/

Marc Oliver Rieger (Contact Author)

University of Trier ( email )

15, Universitaetsring
Trier, 54286
Germany

HOME PAGE: http://www.banking-finance.uni-trier.de

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