Abstract
We investigate how previous generations of migrants and their children integrated into Austrian society, as measured by their wealth ownership. Using individual-level data from the Household Finance and Consumption Survey (HFCS), we document (1) a positive average migrant wealth gap between migrants and natives—that is, migrants owning less wealth than natives, especially in the upper half of the distribution, (2) substantial within-group inequality for migrants, and (3) evidence for catch-up, since second-generation migrants are much more similar to natives in terms of wealth and socio-economic characteristics than first-generation migrants. Using a RIF regression, we confirm an economically significant migrant wealth gap for first-generation migrants after controlling for socio-economic characteristics especially for the upper middle of the distribution, where housing wealth is a particularly relevant asset category. Second-generation migrants’ wealth gap is fully explained by our covariates in the middle of the distribution, whereas at the top where business wealth is more salient, their characteristics predict them to have higher wealth than natives. Decomposing the partial effects of covariates suggests that inheritances have the highest explanatory power for the migrant wealth gap of both first- and second-generation migrants, further buttressing the case for progressive integration in terms of wealth, while the composition of the migrant population, and in particular migrants’ heritage may continue to play a role in their wealth ownership.
Highlights
Wealth is an indicator of integration: owning a home or a business heightens the sense of "belonging" in a host country
The difference between the explained gap and the raw gap is the part of the migrant wealth gap that can not be attributed to the explanatory variables
The negative explained gap at the upper half of the wealth distribution indicates that we would expect second-generation migrants to own more wealth than natives based on their socio-demographic characteristics
Summary
Wealth is an indicator of integration: owning a home or a business heightens the sense of "belonging" in a host country. Opportunities to accumulate wealth are unequally distributed and chances to inherit assets differ by migration background (Gittleman and Wolff 2004; Semyonov and Lewin-Epstein 2013). These differences in socio-demographic characteristics between migrants and natives might result in a sizable migrant wealth gap—migrants owning less wealth than natives. Among the factors that affect wealth accumulation are direct effects like earnings capacity, saving behavior, rates of return, and wealth transfers As data for these are rare and may be subject to reporting issues, the literature relies on a host of indirect factors, among them age, education, marital status, employment status, and migration cohort. This paper asks the question: How do previous generations of migrants and their native-born descendants integrate into their destination society, as measured by their wealth ownership?
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