Social Interaction and the Minority-Majority Earnings Inequality: Why Being a Minority Hurts but being a big Minority Hurts More

Empirical findings that minorities typically attain lower economic status than majorities and that relatively larger minorities perform worse than smaller ones pose a challenge to economics.To explain this scale puzzle, I model an economy where the society is bifurcated into two social groups that differ in their size and sociocultural characteristics - the minority and the majority - and individuals form their human capital through social interaction in social networks.I establish that the different social group sizes and the sociocultural differences suffice to generate earnings inequality between the two social groups whenever sociocultural differences hinder social interaction between majority and minority individuals and there are networks effects in human capital acquisition.If there are, in addition, asymmetric information in the labor market and a choice of heterogeneous skills in the economy, minority and majority individuals tend to acquire different (combinations of) skills and the predicted patterns of income inequality comply with the scale puzzle under fairly general conditions.Moreover, in this study I offer an answer why some minorities do better than majorities, why minority individuals tend to spend more time socializing in families than in schools, and why integration may harm minorities.minority groups;inequality;human capital;incomes;labour market

Social Interaction and the Minority-Majority Earnings Inequality:Why Being a Minority Hurts but being a big Minority Hurts More

Empirical findings that minorities typically attain lower economic status than majorities and that relatively larger minorities perform worse than smaller ones pose a challenge to economics.To explain this scale puzzle, I model an economy where the society is bifurcated into two social groups that differ in their size and sociocultural characteristics - the minority and the majority - and individuals form their human capital through social interaction in social networks.I establish that the different social group sizes and the sociocultural differences suffice to generate earnings inequality between the two social groups whenever sociocultural differences hinder social interaction between majority and minority individuals and there are networks effects in human capital acquisition.If there are, in addition, asymmetric information in the labor market and a choice of heterogeneous skills in the economy, minority and majority individuals tend to acquire different (combinations of) skills and the predicted patterns of income inequality comply with the scale puzzle under fairly general conditions.Moreover, in this study I offer an answer why some minorities do better than majorities, why minority individuals tend to spend more time socializing in families than in schools, and why integration may harm minorities.

Eastern partnership migrants in Germany: outcomes, potentials and challenges

Despite the ongoing dialogue on facilitating mobility between the European Union and the Eastern Partnership (EaP) countries, very little is known about the magnitude and characteristics of migration from these countries. We find that EaP migrants experience worse labor market outcomes than other migrant groups, but current and potential migrants hold qualifications in those areas were skill shortages are expected. Therefore, the monitoring and supervision of EaP integration will be consequential in order to understand how much of the current brain waste is driven by poor assessment of foreign qualifications, and to unleash the potential of migration for the German economy

An Expert Stakeholder's View on European Integration Challenges

The standard approach of analysing gaps in social and labor market outcomes of different ethnic groups relies on analysis of statistical data about the affected groups. In this paper we go beyond this approach by measuring the views of expert stakeholders involved in minority integration. This enables us to better understand the risk of minority exclusion; the inner nature of discrimination, negative attitudes and internal barriers; as well as the ethnic minorities' desires and perceptions about which approaches are better than others in dealing with integration challenges. Main findings are that ethnic minorities do want to change their situation, especially in terms of employment, education, housing and attitudes towards them. Insufficient knowledge of the official language, insufficient education, discriminatory attitudes and behavior towards ethnic minorities as well as institutional barriers, such as citizenship or legal restrictions, seem to constitute the key barriers to their social and labor market integration

Ethnicity, Job Search and Labor Market Reintegration of the Unemployed

This paper is based on recently collected and rich survey data of a representative sample of entrants into unemployment in Germany. Our data include a large number of migration variables, allowing us to adapt a recently developed concept of ethnic identity: the ethnosizer. To shed further light on the native-migrant differences in economic outcomes, we investigate the labor market reintegration, patterns of job search, and reservation wages across unemployed migrants and natives in Germany. Our results indicate that separated migrants have a relatively slow reintegration into the labor market. We explain this finding by arguing that this group exerts a relatively low search effort and that it has reservation wages which are moderate, yet still above the level which would imply similar employment probabilities as other groups of migrants

Opportunity or threat? Public attitudes towards EU Freedom of Movement

This article examines the effect of individual and contextual variables on preference formation towards European Union (EU) freedom of movement. Our multilevel analyses of Eurobarometer data show that citizens with low levels of human capital and strong feelings of national identity are more likely to oppose intra-EU migration. However, we argue that in order to fully grasp variation in public preferences, we need to consider the domestic context. Utilitarian and affective theories have more explanatory power in richer countries, but in less affluent member states support for free movement is evenly high irrespective of individual dispositions. Our findings have implications for the progress of European integration, especially at a time when the EU is in the process of deciding on a course of action about its future direction

Ethnic diversity and labor market success

The economic potential of ethnic and cultural diversity is often underestimated. This paper summarizes a number of recent studies which show that 'soft' factors such as attitudes, perceptions and identities - and in particular ethnic identities - significantly affect economic outcomes. More specifically, the studies analyze the process of cultural integration over migrant generations as well as the process of job search and labor market reintegration of the unemployed. The economy can thus gain productivity and efficiency by recognizing and incorporating such multi-ethnic factors. Cultural assimilation that goes along with a loss of migrants' own cultural heritage does not appear to be the sole or dominant strategy of an economically successful integration. To tap the full potential of ethnic and cultural diversity, an increased cultural and ethnic open-mindedness of the native population is desirable

A Sustainable Immigration Policy for the EU

A sustainable EU Immigration Policy aims to contribute to a vibrant European society through more effectively and selectively managed immigration from outside the EU, more attention to integration of immigrants, more rooting out of discrimination, more asylum centres close to areas of conflict, and more attention to education and training in areas where refugees have settled. Immigration from outside the EU is often opposed, mainly because of sluggish integration combined with tensions in actual and perceived values between immigrants and native populations. These divisions affect not only the first generation of immigrants, but also those that follow. We propose a sustainable, win-win policy fostering the benefits of immigration and in line with the preferences of EU citizens holding not only positive but also more sceptical views on immigration while relying on adherence to human rights. The proposed policy is directed towards more effectively and selectively managed immigration based on the employability potential of the immigrant, combined with more attention to integration and stricter measures to fight discrimination. We also acknowledge the need for a robust policy framework to cope with asylum and abrupt large-scale waves of refugees wanting to enter the EU, resulting from conflicts, natural catastrophes, and other sudden or violent events. We propose screening schemes for refugee camps surrounding countries they have fled to determine migrants' refugee status, channelling them either as economic migrants, selected on their employability, or through a humanitarian scheme that respects the EU's multilateral and bilateral commitments. Such a humanitarian scheme would be embedded into education-cooperation policies, to provide better opportunities to qualify for admission and substantially greater support for refugees

Five characteristics of youth unemployment in Europe

Current levels of youth unemployment need to be understood in the context of increased labor market flexibility, an expansion of higher education, youth migration, and family legacies of long-term unemployment. Compared with previous recessions, European-wide policies and investments have significantly increased with attempts to support national policies. By mapping these developments and debates, we illustrate the different factors shaping the future of European labor markets. We argue that understanding youth unemployment requires a holistic approach that combines an analysis of changes in the economic sphere around labor market flexibility, skills attainment, and employer demand, as well as understanding the impact of family legacies affecting increasingly polarized trajectories for young people today. The success of EU policy initiatives and investments will be shaped by the ability of national actors to implement these effectively

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