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IZA
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Assimilation via Prices or Quantities? Labor Market Institutions and Immigrant Earnings Growth in Australia, Canada, and the United States
by
Heather Antecol, Peter J. Kuhn, Stephen Trejo
(June 2003)
published in: Journal of Human Resources, 2006, 41 (4), 821-840
Abstract:
How do international differences in labor market institutions affect the nature of immigrant
earnings assimilation? Using 1980/81 and 1990/91 cross-sections of census data from
Australia, Canada, and the United States, we estimate the separate effects of arrival cohort
and duration of destination-country residence on immigrant outcomes in each country.
Relatively inflexible wages and generous unemployment insurance in Australia suggest that
immigrants there might improve themselves primarily through employment gains rather than
wage growth, and we find empirically that employment gains explain all of the labor market
progress experienced by Australian immigrants. Wages are less rigid in Canada and the
United States than in Australia, with the general consensus that the U.S. labor market is the
most flexible of the three. We find that wage assimilation is an important source of immigrant
earnings growth in both Canada and the United States, but the magnitude of wage
assimilation is substantially larger in the United States. These same general patterns remain
when we replicate our analyses for two subsamples of immigrants – Europeans and Asians –
that are more homogeneous in national origins yet still provide sufficiently large sample sizes
for each country.
Text: See Discussion Paper No. 802
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