A Reevaluation of the Role of Family in Immigrants' Labor Market Activity: Evidence from a Comparison of Single and Married Immigrants

Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single immigrants. The logic underlying this alternative method states that if credit constraints are binding, then only married immigrants can cross-finance their investment within the family. In order to overcome potential selection bias that would arise if unobserved characteristics that affect the marital status of the individual also affect his/her labor market outcomes, we construct a difference-in-differences estimator that exploits variation in the labor market outcomes of married and single natives. Implementation of this method using US and Israeli data leads to a rejection of the FIH in both countries.family investment model, labor supply

A Reevaluation Of the Role Of Family In Immigrants' Labor Market Activity;Evidence From a Comparison Of Single and Married Immigrants

Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single immigrants. The logic underlying this alternative method states that if credit constraints are binding, then only married immigrants can cross-finance their investment within the family. In order to overcome potential selection bias that would arise if unobserved characteristics that affect the marital status of the individual also affect his/her labor market outcomes, we construct a difference-in-differences estimator that exploits variation in the labor market outcomes of married and single natives. Implementation of this method using US and Israeli data leads to a rejection of the FIH in both countries.

Estimating the Return to Training and Occupational Experience : The Case of Female Immigrants

Do government provided training programs benefit the participants and the society? We address this question in the context of female immigrants who first learn the new language and then choose between working or attending government provided training. Although theoretically training may have several outcomes, most evaluations have focused on only one outcome of training: the expected wage. However, training might have no direct effect on wage, but, nevertheless, affect employment probability in higher paid jobs. In order to measure the return to government provided training, and overcome the above reservations, we formulate an estimable stochastic dynamic discrete choice model of training and employment. Our estimates imply that training has no significant impact on the mean offered wage in bluecollar occupation, but training increases the mean offered wage in white-collar occupation by 19 percent. Training also substantially increases the job offer rates in both occupations. Furthermore, counterfactual policy simulations show that free access to training programs relative to no training could cause an annual earnings growth of 31.3 percent. This large social gain (ignoring the cost of the program) comes mainly from the impact of training on the job offer probabilities and, consequently, on unemployment, and not, as conventionally thought, from the impact of training on potential earnings. Moreover, free access to training increases the average ex-ante expected present value of utility for a female immigrant at arrival (individual benefit) by 50 percent relative to the existing training opportunity

Age at Immigration and High School Dropouts

We focus on high school dropout rate among male and female immigrant children. We consider the relationship between the dropout rate and age of arrival of the immigrants. Using repeated cross sectional data from the Israeli Labor Force Surveys of 1996-2011 we show that the share of high school dropouts among immigrant children who arrived from the Former Soviet Union during 1989-1994 is at least as double than among natives in the same age group. Further, we show that among immigrant youth there is a monotonic negative relation between age at arrival and the share of high school dropouts. To understand our results we present a theoretical framework that links between age at arrival in the host country, language proficiency, quality of education and wages

Mass Migration to Israel and Natives? Transitions from Employment

This paper studies the impact of mass migration from the Former Soviet Union to Israel on natives? probability of moving from employment to non-employment in a segmented labor market that is defined by various combinations of schooling, occupation, industry, district of residence and experience. We find that the share of immigrants in a given labor market segment is generally positively associated with the probability of natives to move from employment in that segment to non-employment, both for males and females. However, when segment fixed-effects are added, this effect is substantially reduced for males, and disappears or is even reversed for females. We conclude that immigrants are negatively selected into occupations with high turnover and that natives were not facing higher probability to exit employment due to immigrants? presence in a certain occupation. Allowing the effect to vary across natives with different levels of education and experience reveals that young men, educated men and workers in the private sector are adversely affected by the presence of immigrants

A reevaluation of the role of family in immigrants' labor market activity: evidence from a comparison of single and married immigrants

Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single immigrants. The logic underlying this alternative method states that if credit constraints are binding, then only married immigrants can cross-finance their investment within the family. In order to overcome potential selection bias that would arise if unobserved characteristics that affect the marital status of the individual also affect his/her labor market outcomes, we construct a difference-in-differences estimator that exploits variation in the labor market outcomes of married and single natives. Implementation of this method using US and Israeli data leads to a rejection of the FIH in both countries

The role of marriage in immigrants' human capital investment under liquidity constraints

This paper presents a two-period human capital investment model of married and single immigrants under binding liquidity constraints, which explains alternative patterns in the host country's labor market. These patterns are also compared to those of natives who face a perfect capital market. By extending Eckstein and Weiss' model (2004) from the case of single immigrants with accessibility to a perfect capital market to the case of credit-constrained immigrant families, it is shown that the comparative advantage in investment that determines which spouse will invest more in local skills depends on his/her imported human capital growth rate rather than on its level. This comparative advantage can lead to full or partial specialization in work and investment activities within immigrant households. However, the level invested by each spouse is non-increasing with the level of the imported human capital of the spouse with the comparative advantage in investment, whereas it is non-decreasing with the level of imported human capital of the other spouse. A comparison of pre and post marriage investment indicates that the spouse with the comparative advantage in investment will increase his/her investment in human capital after his/her marriage, whereas the other spouse will decrease it. The more efficient investment due to marriage enables the achievement of a Pareto improvement

The Dynamic Impact of Immigration on Natives' Labor Market Outcomes: Evidence from Israel

This paper studies the dynamic impact of mass migration from the Former Soviet Union to Israel on natives? labor market outcomes. Specifically, we attempt to distinguish between the short-run and long-run effects of immigrants on natives? wages and employment. The transition of immigrants into a new labor market is a gradual process: the dynamics of this process come from immigrants? occupational mobility and from adjustments by local factors of production. Natives may therefore face changing labor market conditions, even years after the arrival of the immigrants. If immigrants are relatively good substitutes for native workers, we expect that the impact of immigration will be largest immediately upon the immigrants? arrival, and may become smaller as the labor market adjusts to the supply shock. Conversely, if immigrants upon arrival are poor substitutes for natives because of their lack of local human capital, the initial effect of immigration is small, and the effect increases as immigrants acquire local labor market skills and compete with native workers. We empirically examine these alternative hypotheses using data from Israel?s Labor Force and Income Surveys from 1989 to 1999. We find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a given labor market segment. A 10 percent increase in the share of immigrants lowers natives? wages in the short run by 1 to 3 percent, but this effect dissolves after 4 to 7 years. This result is robust to a variety of different segmentations of the labor market, to the inclusion of cohort effects, and to different dynamic structures in the residual term of the wage equation. On the other hand, we do not find any effect of immigration on employment, neither in the short nor in the long run