Working Paper: CEPR ID: DP3412
Authors: Sarit Cohen; Zvi Eckstein
Abstract: This Paper analyses the labour mobility and human capital accumulation of male immigrants who moved from the former Soviet Union to Israel. We formulate an estimable dynamic choice model for employment and training in blue and white-collar occupations, where the labour market randomly offered opportunities are affected by past choices. The estimated model well fits the observed patterns of the fast decrease in unemployment as immigrants first find blue-collar jobs and attend training, followed by a gradual movement to white-collar occupations. The estimated rates of return to local training, local experience and local language are very high, but imported skills have zero (conditional) return. Furthermore, the welfare gain from the impact of training on job offer probabilities is larger than its effect on wages. Due to low job offer rates, the realized rate of return from white-collar training is relatively low and takes time. As a result, the annual aggregate wage growth, due to the availability of training programs, increases with time in Israel to 1.4% in the fifth year.
Keywords: immigration; occupation; training; transitions; unemployment; welfare
JEL Codes: J31; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Local training (M53) | Job offer probabilities (M51) |
| White-collar training (M53) | Job offer probabilities (M51) |
| White-collar training (M53) | Rate of return to white-collar training (J24) |
| Blue-collar training (J24) | Rate of return to blue-collar training (J24) |
| Imported skills (Y80) | Wage growth (J31) |
| Training programs (M53) | Individual welfare gain (D69) |
| Training (M53) | Aggregate wage growth (J39) |