84th International Atlantic Economic Conference

October 05 - 08, 2017 | Montreal, Canada

Assimilation and earnings of recent U.S. immigrants

Friday, 6 October 2017: 9:00 AM
Lawrence Brunner, Ph.D , Economics, Central Michigan University, Mt. Pleasant, MI
Our objective is to see how well current immigrants assimilate into the U.S. economy, i.e. achieve earnings equal to natives. Is wage growth for immigrant groups from different countries that earn more at entry greater than wage growth for immigrant groups earning less at entry? If so, that implies that the higher earning groups do better over time, immigrants that earn less at entry fall further behind over time, and that differences between immigrants from different countries (and between immigrants and natives) widen over time.

Using American Community Survey data, we will examine the earnings of approximately 190,000 immigrant men, aged 25 – 34, entering the U.S. from 1995 to 1999 from different source countries. We then compare their average entry wages in 2000 with wage growth for immigrants from that country over the next 10 years, computed from the difference between their entry wages and the wages of men 35 – 44 in 2010. This will show whether groups earning more at start increase their earnings more quickly than those earning less at start, and how their earnings gains compare with natives. We use regression to relate average entry wages (independent variable) with wage growth (dependent variable).

One issue in the literature is the question of whether immigrant earnings should be adjusted for differences in education. Some researchers find that for immigrants with the same levels of education, lower entry wages are associated with higher wage growth. Thus, high school dropouts would converge to the same (low) wages, while college graduates would converge to a different (higher) level of wages. We will examine to what extent this type of conditional convergence occurs. However, conditional convergence does not mean that immigrants in general will raise their earnings to equal the native level, especially if immigrants have a much lower average level of education.

A second issue is whether more recent immigrants entering have progressed less than previous immigrants. Thus, we will examine the earnings of immigrant men aged 25- 34 in 1990, who entered in 1985 – 89, see how they compare to natives at entry and over time (in 2000 and 2010), and see whether their wage growth over time is greater or less than immigrants arriving later.

The results of the study may help policymakers interested in reforming U.S. immigration laws to promote the entry of immigrants who can assimilate more easily into the U.S. economy