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Dynamics of employment assimilation

Journal article
Authors Alpaslan Akay
Published in IZA Journal of Migration
Volume 5
Issue 1
ISSN 2193-9039
Publication year 2016
Published at Department of Economics
Language en
Links dx.doi.org/10.1186/s40176-016-0061-...
Keywords Dynamic panel data models, Employment assimilation, Initial values problem
Subject categories Globalization Studies, Economics

Abstract

This paper investigates the dynamics of immigrants’ employment assimilation in comparison with the standard static assimilation model. When the effect of past employment experience on current employment possibilities differs between immigrants and natives, then the static assimilation model might produce biased and unrealistic predictions of the relative employment probabilities of immigrants. Using a high-quality panel dataset collected in Sweden and a state-of-the-art non-linear dynamic assimilation model, we find a large employment status persistence that substantially differs between immigrants and native Swedes. We show that failing to control for the differential past labor market experience leads to an incorrect account of the host country-specific human capital that results to a large overestimation (underestimation) of the short-run (long-run) marginal assimilation rates when using the standard static assimilation model. JEL Classification: C33, J15, J61 © 2016, Akay.

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