Prospects for immigrant-native wealth assimilation: evidence from financial market participation

Because financial transactions are important for wealth accumulation, and rely on trust and confidence in institutions, the financial market behavior of immigrants can provide important insights into the assimilation process. Compared to the native-born, immigrants are less likely to own savings and checking accounts and these differences tend to persist over time. Our results suggest that a large share of the immigrant-native gap in financial market participation is driven by group differences in education, income, and geographic location. For a given immigrant, the likelihood of financial market participation decreases with higher levels of ethnic concentration in the metropolitan area.Financial institutions ; Immigrants ; Wealth

What can we learn about financial access from U.S. immigrants?

We find that wealthier and more educated immigrants are more likely to make use of basic banking services and other formal financial services. Holding these (and other) factors constant, we find immigrants from countries with more effective institutions are more likely to have a relationship with a bank and use formal financial markets more extensively. Institutional quality appears to be an important factor in both determining both the breadth and the depth of financial access. It can explain approximately 17 percent of the country-of- origin-level variation in bank account usage among immigrants in the U.S., after other characteristics, including wealth, education and income, are controlled for. Institutional quality is even more important for explaining more extensive participation in financial markets, accounting for 27 percent of the analogous variation. We examine various measures of institutional effectiveness and are careful to control for unobserved individual characteristics, including specifications with country fixed-effects.Immigrants ; Financial institutions ; Payment systems

Institutional quality and financial market development: evidence from international migrants in the U.S.

A growing body of theoretical and empirical work identifies the ability of a country’s institutions to protect private property and provide incentives for investment as a key explanation for the persistent disparity in financial market development. We add to this literature by analyzing the impact of institutions on financial development using data on the financial decisions of immigrants and the native-born in the U.S. While all of the individuals whose decisions we analyze face the same formal institutional framework in the U.S., immigrants bring with them varied experiences with institutions in their home countries. We find that immigrants who come from countries with institutions that are more effective at protecting property rights are more likely to participate in U.S. financial markets. ; The effect of home country institutions is very persistent and impacts immigrants for the first 25 years that they spend in the U.S. Evidence from variation in the effect of home country institutions by age at migration, suggests that individuals appear to learn about home country institutions before the age of sixteen, probably in the home and potentially at school, rather than through direct experience. These findings are robust to alternative measures of institutional effectiveness and to various methods of controlling for unobserved individual characteristics.Immigrants ; Financial markets

Bank crises and investor confidence

In addition to their direct effects, episodes of financial instability may decrease investor confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact that it is difficult to disentangle the effect of investor confidence from coincident direct effects of the crisis. In order to isolate the effects of financial crises on investor confidence, we study the investment behavior of immigrants in the U.S. Our findings indicate that systemic banking crises have important effects on investor behavior. Immigrants who have experienced a banking crisis in their countries of origin are significantly less likely to have bank accounts in the U.S. This finding is robust to including important individual controls like wealth, education, income, and age. In addition, the effect of crises is robust to controlling for a variety of country of origin characteristics, including measures of financial and economic development and specifications with country of origin fixed effects.Financial crises

Does Female Schooling Reduce Fertility? Evidence from Nigeria

The literature generally points to a negative relationship between female education and fertility. Citing this pattern, policymakers have advocated educating girls and young women as a means to reduce population growth and foster sustained economic and social welfare in developing countries. This paper tests whether the relationship between fertility and education is indeed causal by investigating the introduction of universal primary education in Nigeria. Exploiting differences by region and age, the paper uses differences-in-differences and instrumental variables to estimate the role of education in fertility. The analysis suggests that increasing education by one year reduces fertility by 0.26 births.

Ethnic Diversity and Charitable Giving

Recent studies suggest that greater community heterogeneity will lead to lower provision of local public goods and less support for governmental income distribution programs towards the needy (Luttmer 2001). Our study analyzes how private donations to charitable organizations that help the needy are affected by greater community heterogeneity. It is important to address this question since charitable organizations are often considered to provide services that are substitutes to provisions from the government. We find that greater ethnic heterogeneity decreases both the probability and the amount an individual contributes to a charitable organization using new data from Panel Study of Income Dynamics (PSID)

Immigrant Assimilation and Charitable Giving

Will immigration impact economic progress and social cohesion in host countries? One indicator that can shed new light on the complex process of immigrant assimilation is charitable giving. Charitable giving and other forms of civic engagement may affect norms of trust, connectedness, and cooperative behavior. We find that immigrant status has a negative, but insignificant impact on the incidence and levels of charitable giving. There is considerable evidence that immigrants adapt rapidly to U.S. charitable institutions over time. Results on private transfers present a striking contrast. Immigrant households are significantly more likely to participate in private transfer networks

Do Immigrants Free Ride More Than Natives?

Are immigrants a burden on host societies, because they receive benefits from, but do not contribute to, the provision of public goods and services? Questions like these have shaped public debate on immigration policy in the United States and Western Europe, and have fueled a large body of research. In this paper, we investigate theoretically and empirically the implications of immigration for the private provision of public goods. We do not find evidence that immigrants free ride more than the native-born. Moreover, immigrants are less likely to receive assistance from non-government sources compared to similar native-born households.We gratefully acknowledge funding from the Center on Philanthropy at Indiana University. We have benefited greatly from comments from Mark Wilhelm, Rich Steinberg, and participants at the 2003 ARNOVA conference. Xiaojun Feng and Jeanne Ruan provided excellent research assistanc

War and Stature: Growing Up During the Nigerian Civil War

The Nigerian civil war of 1967-70 was precipitated by secession of the Igbo-dominated south-eastern region to create the state of Biafra. It was the first civil war in Africa, the predecessor of many. We investigate the legacies of this war four decades later. Using variation across ethnicity and cohort, we identify significant long run impacts on human health capital. Individuals exposed to the war at all ages between birth and adolescence exhibit reduced adult stature and these impacts are largest in adolescence. Adult stature is portentous of reduced life expectancy and lower earnings.human capital investments, early life, height, war, Nigeria