ImmAssimSlides2009

ImmAssimSlides2009 - Immigrant Assimilation Some Background...

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Immigrant Assimilation: Some Background
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Barry Chiswick (JPE 1978) studied a cross-section of men in the U.S. Roughly speaking, he proposed that: Y M /Y N = a + b(YSM) + c(Age) + dX + ε. (1) He estimated this relationship, found that b > 0, and calculated that immigrants would ‘overtake’ natives (Y M /Y N =1) within 20 years of arrival. But note that YSM = K – YOA, where K is the current calendar year, and YOA (year of arrival—an ‘arrival cohort’ effect) might also affect immigrants’ relative earnings. (i.e., the model we would like to estimate contains both YSM and YOA, but that model can’t be estimated/is not identified because the two variables are perfectly collinear). Substituting the definition of YSM, it follows that Chiswick’s model is observationally equivalent to a model where: Y M /Y N = [a + bK] - b(YOA) + c(Age) + dX + ε. (2) So Chiswick’s data is equally consistent with a scenario in which there is strong assimilation but no cohort effects (1), or one with no assimilation but declining ‘cohort quality’ (2).
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Chiswick’s ‘assimilation’ scenario (1) (implicitly assumes YOA has no effect, thus all cohorts start out at the same (relative) entry wage): Year Y M /Y N 1970 1960 1950 1940 1930 ● arrived 1930 ● arrived 1940 ● arrived 1950 ● arrived 1960 ● arrived 1970
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