Ethnic capital and intergenerational transmission of educational attainment

This paper studies the role of ethnicity in the intergenerational transmission of educational attainment within the framework outlined by Borjas (Quarterly Journal of Economics, 1992, 107(1), 123-150). Relying on heteroskedasticity to identify parameters in the presence of endogenous regressors, I find evidence that the ordinary least squares estimates of the effect of ethnic capital on intergenerational transmission of education are biased upwards due to the transfer of unobserved ability. I also find that, while the role of parental capital has declined over time, ethnic capital has a relatively constant effect on intergenerational transmission of educational attainment

Consumer Discrimination and Self-Employment

Self-employment rates and incomes differ significantly by race. We show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller. Equilibrium income distributions have two properties: mean black incomes are lower than mean white incomes, and the returns to ability are lower for black than for white sellers. Able blacks, therefore, are less likely to self-select into the self-employment sector than able whites. Using the 1980 Census data, we find that observed differences in the self-employment income distributions are consistent with the theoretical predictions.

Self-Selection and Internal Migration in the United States

Within the conceptual framework of the Roy model, this paper provides an empirical analysis of internal migration flows using data from the National Longitudinal Surveys of Youth. The theoretical approach highlights regional differences in the returns to skills: regions that pay higher returns to skills attract more skilled workers than regions that pay lower returns. Our empirical results suggest that interstate differences in the returns to skills are a major determinant of both the size and skill composition of internal migration flows. Persons whose skills are most mismatched with the reward structure offered by their current state of residence are the persons most likely to leave that state. and these persons tend to relocate in states which offer higher rewards for their particular skills.

The Role of Race and Birth Place in Welfare Usage among Comparable Women: Evidence from the U.S.

There is evidence that women are more likely to live in poverty than men. Given the fact that the poor are more likely to use welfare, it becomes useful to consider welfare usage among women. A-priori welfare programs are set up in such a way that welfare usage should be based primarily on economic needs and health concerns. However, it is possible that an individual's experiences could affect their perception and preferences for using government assistance. In this scenario, differences in welfare usage will exist for individuals with similar characteristics but different experiences. We explore this possibility among women and investigate if race/ethnicity and birthplace still have a role to play in the decision to use welfare even after controlling for income, health and other demographic factors like employment. We find that race does not matter for welfare usage among comparable women. In addition, we do not find any significant differences in welfare usage among women based on birthplace - suggesting that comparable naturalized and native born women share similar preference for welfare. The only exception is women born in US territories. Our results suggest that among comparable women, women born in U.S territories seem to be more inclined to welfare usage in comparison to US born White women

Migration Costs and Networks: household optimal investment in migration

International migration is an expensive form of investment, that only households relatively better off can afford. However poorer households have the higher incentive to migrate. Migration decision is conditional on the entry cost, expected returns and risks of migration. This paper, using data from Mexican rural and urban areas, examines the relation between household and community networks and costs and risks of migration focusing on the optimal investment in migration. To investigate an household optimal number of migrants this paper introduces a Three Step procedure to solve simultaneously for the endogeneity of network size and possible selection of migrants. The analysis confirms the inverted U-shaped relation between wealth and migration, stressing the importance of networks particularly in facilitating the migration of social strata belonging to the left tail of the income distribution. Moreover, in presence of sunk costs and/or high initial investment, household and community networks accomplish different functions

Hispanic Immigration to the United States

This chapter presents some of the exceptional characteristics of recent Hispanic immigration to the United States. In 2005, there were nearly 40 million Hispanic immigrants and descendants of Hispanic immigrants living in the U.S. The assimilation experience of this large cultural group does not seem to be following the path past immigrants to the U.S. followed. Most third generation Hispanics in the U.S. still find themselves with income and education levels below the U.S. averages. Most forecasts predict that about 60 million Hispanics and Hispanic-Americans will be living in the U.S. by 2030

Aggregate Fluctuations and International Migration

Traditional theories of integration such as the optimum currency area approach attribute a prominent role to international labour mobility in coping with relative economic fluctuations between countries. However, recent studies on international migration have overlooked the role of short-run factors such as business cycles or changes in employment rates in explaining international migration flows. This paper aims to fill that gap. We first derive a model of optimal migration choice based on an extension of the traditional Random Utility Model. Our model predicts that an improvement in the economic activity in a potential destination country relative to any origin country may trigger some additional migration flows on top of the impact exerted by long-run factors such as the wage differential or the bilateral distance. Compiling a dataset with annual gross migration flows between most developed countries over the 1980-2010 period, we empirically test the magnitude of the effect of these short-run factors on bilateral flows. Our econometric results indicate that aggregate fluctuations and employment rates affect the intensity of bilateral migration flows. We also provide compelling evidence that the Schengen agreement and the introduction of the euro significantly raised the international mobility of workers between the member countries

The effects of immigration on wages: An application of the structural skill-cell approach

This paper investigates how recent immigration inflows from 2002 to 2008 have affected wages in Switzerland. This period is of particular interest as it marks the time during which the bilateral agreement with the EU on the free cross-border movement of workers has been effective. Since different types of workers are likely to be unevenly affected by recent immigration inflows, we follow the ”structural skill-cell approach” as for example employed by Borjas (2003) and Ottaviano and Peri (2008). This paper provides two main contributions. First, we estimate empirically the elasticities of substitution between different types of workers in Switzerland. Our results suggest that natives and immigrants are imperfect substitutes. Regarding different skill levels, the estimates indicate that workers are imperfect substitutes across broad education groups and across different experience groups. Second, the estimated elasticities of substitution are used to simulate the impact on domestic wages using the actual immigration inflows from 2002 to 2008. For the long run, the simulations produce some notable distributional consequences across different types of workers: While previous immigrants incur wage losses (−1.6%), native workers are not negatively affected on average (+0.4%). In the short run, immigration has a negative macroeconomic effect on the average wage, which, however, gradually dies out in the process of capital adjustment

There Goes the Neighborhood? – People‘s Attitudes and the Effects of Immigration to Australia

This paper compares the effects of immigration flows on economic outcomes and crime levels to the public opinion about these effects using individual and regional data for Australia. We employ an instrumental variables strategy to account for non-random location choices of immigrants and find that immigration has no adverse effects on regional unemployment rates, median incomes, or crime levels. This result is in line with the economic effects that people typically expect but does not confirm the public opinion about the contribution of immigration to higher crime levels, suggesting that Australians overestimate the effect of immigration on crime

Migration in an Enlarged EU: A Challenging Solution?

The 2004 and 2007 enlargements of the European Union were unprecedented in a number of economic and policy aspects. This essay provides a broad and in-depth account of the effects of the post-enlargement migration flows on the receiving as well as sending countries in three broader areas: labour markets, welfare systems, and growth and competitiveness. Our analysis of the available literature and empirical evidence shows that (i) EU enlargement had a significant impact on migration flows from new to old member states, (ii) restrictions applied in some of the countries did not stop migrants from coming but changed the composition of the immigrants, (iii) any negative effects in the labour market on wages or employment are hard to detect, (iv) post-enlargement migration contributes to growth prospects of the EU, (v) these immigrants are strongly attached to the labour market, and (vi) they are quite unlikely to be among welfare recipients. These findings point out the difficulties that restrictions on the free movement of workers bring about