1、,IMMIGRANTS INTEGRATION IN OECD COUNTRIES: DOES LABOUR MARKET POLICY MATTER? presented by Orsetta Causa (OECD Economics Department and PSE),The project,Provide comparable cross-country estimates of labour market integration of immigrants in OECD countries. Use cross country comparable household pane
2、l data. Identify labour market policies or institutions most likely to influence labour market integration and hence explain cross country differences in integration,Motivation (1/2),Performance gaps between comparable immigrants and natives differ significantly across countries. Cross country compa
3、rable estimates are lacking. Few exceptions: Peracchi and de Palo, 2006; Buchel and Frick, 2003, Adsera and Chiswick, 2004,Motivation (2/2),What drives cross country differences in immigrants labour market integration? Premise: Role of History and Migrant related Policies. Migration and integration
4、policies, Migrant specific policies Do framework conditions matter? do general labour market policies (LMP) affect immigrants integration? Existing literature is scant on the subject (exception is Antecol et al.2006),Outline,The approach The Data Results by country Cross country results: the role of
5、 labour market policies Conclusions,Literature has mostly focused on the US (Chiswick, 1978, Borjas, 1985, 1995). Literature on European countries is scarce (see Zimmermann Constant eds. (2004)General view on wage gaps: Immigrants earn less than natives both at entry and over time (estimated wage di
6、ff. in the US average -20% ) There is a catch up of wages over time Assimilation through local human capital accumulation, e.g. language skills (Chiswick and Miller, 1992, 1995), social capital,Integration. Literature: Main findings (1/2),Literature has mostly focused on wage gaps as opposed to empl
7、oyment gap for the US - for European countries the opposite holdsGeneral view on employment/ unemployment gaps: In European countries: immigrants display higher risk of being unemployed, the gap varies across countries (see OECD, 2005, Angrist and Kugler, 2003) Immigrants search methods are less eff
8、ective than natives (Frijtesr et al. (2005) , Olli Segendorf (2005) ),Integration. Literature: Main findings (2/2),The outcome profile estimated form cross sectional data is known to suffer from potential bias Changes in the unmeasured dimension of skill (“quality”) of new immigrants cohort. Return
9、Migration Recent research has focused on distinguishing cohort effects from assimilation effects by relying on the synthetic cohort approach (Borjas, 1994) Longitudinal data are important because they enable to track individuals across time,Integration. Empirical approach,LMP - Step1: Why would LMP
10、matter?,Some immigrants characteristics- relative to comparable natives- are likely to interact with LMP: Productivity level - at arrival Worker-to-job matching capacities Reservation wage Bargaining power Labour market discrimination,LMP Step2: Imperfect substitutability in a wage bargaining model
11、(Jimeno and Rodriguez-Palenzuela s (2002),Basic Set up of the model 1)Production and Labour demand. Assume Imperfect substitutability between two homogeneous categories of workers2) Wage determination by collective bargaining. Assume lower reservation wage and bargaining power for immigrants. Predic
12、tions: An increase in the relative bargaining power of natives increases their relative wage, but also their relative unemployment rate An increase in the aggregate wage decreases the relative wage of natives, while increasing the relative unemployment rates of immigrants.,LMP Step3: Immigrants in a
13、 dual labour market (Blanchard and Landier, 2002),Basic set up of the model Assumption: Consider two population, with the immigrant population being characterized by a lower expected productivity level Predictions:-Immigrants are likely to be overrepresented among outsiders on the labour market, as
14、reflected in a higher prevalence of short-term (and presumably low-pay) jobs - The higher the strictness of the legislation on the use of regular contracts, relative to temporary contracts, the more pronounced immigrants overrepresentation among outsiders, and therefore the wider the difference in t
15、he share of short-term jobs, and in wages,The Data,1) EU15 Countries: ECHP DATA A standardised annual longitudinal survey carried out at the level of the European union. The ECHP has reached 7 waves (from 1994 to 2001). The target population consists of all private households through the national te
16、rritory of each country. The ECHP is based on a common questionnaire centrally designed by Eurostat.2) Other OECD countries: US:- PSID: longitudinal household data (1997-2001) Australia- HILDA: longitudinal household data (2001-2003) Canada: SLID: longitudinal household data (1996-2001),Attrition At
17、tritors individual characteristics, by migration status,The Framework (1/3),Analyses differences in activity rates, employment rates, and wage rates, across comparable immigrants and natives Control for human capital and socioeconomic characteristics Immigrant specific variable: Country of birth cri
18、terion Exposure to the country of residence. Due to the sample characteristics, separate immigrants based on 15 year duration threshold Distinguish EU 15, OECD English speaking.,The Framework (2/3),The econometric procedure corrects for non random sample selection into activity and into employment b
19、ased on observables and unobservable (see Heckman, 1979) Three steps: Activity rates among working age individuals (16-64). Separate men and women. Employment rates across active, correcting for sample selection into activity Wage rates across employed individuals, correcting for sample selection in
20、to paid employment,The Framework (3/3),Estimated equation (general specification):Where y is the labour market outcome indicator for individual i, in country c, period t. X are socio economic controls and I indicates immigrant dummy; captures country-level, time-varying unobservable characteristics.
21、 The selection equation, omitted here,includes an additional regressor, , categorical variable coding for household type for individual i living in household j,Estimates by country (1/2),Employment gap among actives versus wage gap for immigrants with less than 15 years residency,Estimates by countr
22、y (2/2),Employment gap among actives versus wage gap for immigrants with more than 15 years residency,Explaining cross country integration differences: the role of labour market policies,To what extent do labour market institutional differences across European countries explain differences in immigr
23、ants varying degree of absorption into the labour market? Pool countries Estimate a “full” model- country specific parameters on every control except immigrant dummies, policy variables and interactions:The estimated immigrant/ native gap is allowed to vary with the level of regulation (variable den
24、oted Reg),Cross country differences: The role of labour market policies,Labour market dualism and precariousness- some evidence based on ECHP Data (1/3),Proportion of non-EU15 born immigrants among individuals declaring to hold fixed-term, short-term contracts, or casual work with no contract,Note:
25、Weighted Data. The individuals are employed working in paid employment more than 15 hours per week. Non-EU refers to individuals not born in EU15 countries except in the case of Germany where the nationality criterion is used. or 15 YSM refers to more or less than 15 years since migration. Source: A
26、uthors calculations based on ECHP.,Labour market dualism and precariousness- some evidence based on ECHP Data (2/3),Impact of migration status on the probability of holding a precarious employment contract cross-country estimates,Labour market dualism and precariousness- some evidence based on ECHP
27、Data (3/3),Estimated interaction between institutional labour market dualism and immigrants probability of holding a precarious contract, relative to comparable natives,Conclusions,Immigrants labor market integration remains a challenge General-purpose labour market policies matter in this respect:
28、Given their specificities, immigrants tend to be especially sensitive to the effect of some policies, such as unemployment benefits and the tax wedge, and most of all to labour market dualism. Further investigation would be useful to understand better the links between labour market policies and immigrants integration in the host labour market.,
