Working Paper: CEPR ID: DP8208
Authors: Amelie Constant; Annabelle Krause; Ulf Rinne; Klaus F. Zimmermann
Abstract: This paper analyzes the reservation wages of first and second generation migrants. Based on recently collected and rich survey data of a representative inflow sample into unemployment in Germany, we empirically test the hypothesis that reservation wages increase from first to second generation migrants. Two extensions of the basic job search model, namely an unknown wage offer distribution and different reference standards, provide theoretical justifications for this conjecture. In both extensions, changing frames of reference are identified as a channel through which the phenomenon of increasing reservation wages may arise. In as far as language skills or self-evaluated returns to characteristics reflect a person?s frames of reference, we find empirical support for this mechanism to be present.
Keywords: Ethnic Identity; Ethnosizer; Germany; Job Search; Migration; Reservation Wages; Unemployment
JEL Codes: F22; J15; J61; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| migrant generation (second) (F22) | reservation wages (R21) |
| migrant generation (first) (F22) | reservation wages (R21) |
| changing frames of reference (language skills) (Y80) | reservation wages (R21) |
| self-evaluated returns to education (I26) | reservation wages (R21) |
| ethnic identity (J15) | reservation wages (R21) |