The effect of immigration on wages in three European countries

We extend the Altonji and Card (1991) framework for analysing the impact of immigrants on natives’ wages from two to three labour types and estimate reduced form wage equations for The Netherlands, United Kingdom and Norway. We find very small effects on natives’ wages and no dominant robust patterns of substitution and complementarity. Effects on wages of earlier immigrants are larger but less reliable. Further work should focus on these own effects.

Employment Assimilation of Immigrants in the Netherlands: Catching Up and the Irrelevance of Education

Using two Dutch labour force surveys, employment assimilation of immigrants is examined. We observe marked differences between immigrants by source country. Non-western immigrants never reach parity with native Dutch. Even second generation immigrants never fully catch up. Caribbean immigrants, who share a colonial history with the Dutch, assimilate relatively quick compared to other non-western immigrants but they still suffer from high unemployment. The study also documents that the quality of jobs is significantly lower for immigrants, especially for those who are at larger cultural distance to Dutch society. Job quality of immigrants increases with the duration of stay but again, does not reach parity with natives. The western immigrants seem to face no considerable difficulties in the Dutch labour market. The most remarkable conclusion is the irrelevance of education for socio-economic position of immigrants once the country of origin has been controlled for.immigrants, employment, unemployment, job quality

Do They Understand the Benefits from Education? Evidence on Dutch High School Students’ Earnings Expectations

Using an internet collected dataset, we will provide some empirical evidence on the information that Dutch high school students possess before their decision on tertiary education participation. The sample is prone to selective participation and high attrition, but we detect little systematic effects and inconsistent reporting of probability distribution is not more frequent than in controlled settings. We find little support for patterns that one would expect from individuals having private information. Girls expect substantially lower earnings in all schooling scenarios, but implicit rate of returns do not differ from those anticipated by boys. We find no evidence of expected risk compensation.wage expectations, wage risk, risk compensation

EARNINGS RISK AND DEMAND FOR HIGHER EDUCATION: A CROSS-SECTION TEST FOR SPAIN

We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in deciding on attending university education, by measuring risk as the residual variance in regional earnings functions. We find that the basic response is negative but that in households with lower risk aversion, the response will be dampened substantially and may even be reversed to positive.earnings risk,schooling decisions,

A Risk Augmented Mincer Earnings Equation? Taking Stock

We survey the literature on the Risk Augmented Mincer equation that seeks to estimate the compensation for uncertainty in the future wage to be earned after completing an education. There is wide empirical support for the predicted positive effect of wage variance and the negative effect of wage skew. We discuss robustness of the findings across specifications, potential bias from unobserved heterogeneity and selectivity and consider the core issue of students’ information on benefits from education.human capital, earnings function, risk

Do Students Expect Compensation for Wage Risk?

We use a unique data set about the wage distribution that Swiss students expect for themselves ex ante, deriving parametric and non-parametric measures to capture expected wage risk. These wage risk measures are unfettered by heterogeneity which handicapped the use of actual market wage dispersion as risk measure in earlier studies. Students in our sample anticipate that the market provides compensation for risk, as has been established with Risk Augmented Mincer earnings equations estimated on market data: higher wage risk for educational groups is associated with higher mean wages. With observations on risk as expected by students we find compensation at similar elasticities as observed in market data. The results are robust to different specifications and estimation models.wage, expectations, wage risk, risk compensation, skewness

Can We Measure Individual Risk Attitudes in a Survey?

We combine a survey and an experiment with real pay-out among Peking University students to measure and validate individual risk attitudes. The experiment involves choosing between a cash payment and playing a lottery. The survey questions ask for the reservation price of a hypothetical lottery and self-assessment of risk attitude on a 0-10 scale. We confirm familiar findings: risk aversion dominates, women are more risk averse than men, risk aversion decreases with increasing parental income, risk attitudes are domain-specific. Correlations between survey measures and experimental measures, are in the right direction, but not very high. The survey measures are valid indicators of experimentally measured risk attitude, but with substantial noise remaining. Heterogeneity in levels and structures of risk attitude is large.risk attitude, survey question, experimental validation

Is Earnings Uncertainty Relevant for Educational Choice? An Empirical Analysis for China

We use the method of Dominitz and Manski (1996) to solicit anticipated wage distributions for continuing to a Master degree or going to work after completing the Bachelor degree. The means of the distributions have an effect on intention to continue as predicted by theory. The dispersions in these individual distributions have no effect on intention to continue, suggesting that anticipated earnings risk does not play a role in the decision.educational choice, wage expectations

Unobserved Heterogeneity and Risk in Wage Variance: Does Schooling Provide Earnings Insurance?

We apply a recently proposed method to disentangle unobserved heterogeneity from risk in returns to education. We replicate the original study on US men and extend to US women, UK men and German men. Most original results are not robust. A college education cannot universally be considered an insurance against unpredictability of wages. One conclusion is unequivocally confirmed: uncertainty strongly dominates unobserved heterogeneity.wage inequality, wage uncertainty, unobserved heterogeneity, selectivity, education, replication