Selective Out-Migration and the Estimation of Immigrants’ Earnings Profiles

Abstract

-This chapter begins by documenting that temporary migrations are not only very common, but that outmigration of immigrants is selective both in terms of migrants' individual characteristics and their economic outcomes. We then examine the problems that arise when estimating immigrants' earnings profiles when outmigration is selective, and discuss the identifying assumptions needed to answer three different questions on immigrants' earnings careers. We show how better data can help to relax these assumptions, suggest appropriate estimators, and provide an illustration using simulated data. We finally provide an overview of existing papers that use different types of data to address selective outmigration when estimating immigrants' earnings profiles.

Estimating immigrant earnings profiles when migrations are temporary

“…Yet when interest is focussed on the latter, these counterfactual distributions must be re-constructed. Micro-econometrics offers an extensive tool set for handling such reconstruction, as discussed in more detail in Dustmann and Görlach (2015).…”

“…We further point out how migrant return decisions are in fact influenced by and may in turn influence other choices that affect the migrants' career and ultimately their earnings paths in the destination country. Under more general scenarios, the reduced form estimators discussed in Dustmann and Görlach (2015) may not be applicable, particularly when stochastics must be taken into account or if migrants can choose how much to invest in human capital. In such a case, estimation must rely on the type of structural modelling applied in Adda, Dustmann and Görlach (2016).…”

“…Our analysis is related to several earlier papers of ours on the subject. In Dustmann and Görlach (2015), we address the problems that arise when estimating the earnings profiles of immigrants and when out-migration is not random. One major conjecture that pervades the extant literature is that the migrant decisions to outmigrate are unrelated to decisions that may affect or be affected by career profiles.…”

Does return migration influence fertility at home?

“…This can further contribute to the conveyance of the cultural norms and values that prevail there. Furthermore, most people move abroad only on a temporary basis [3], so the return itself can represent an important channel through which to transmit the fertility norms that prevail in the host country and, thereby, influence the rate of population growth in the country of origin.…”

“…This means the indirect influence exerted by migration on population growth in migrant-sending countries can go in either direction. And given that "permanent migrations are-and possibly always have been-the exception rather than the rule" ( [3], p. 491), returning migrants can represent an important channel through which fertility norms are transmitted across countries.…”