Differences in earnings assimilation of immigrants from the Former Soviet Union to Germany and Israel during 1994-2005: The interplay between context of reception, observed, and unobserved immigrants’ attributes

Abstract

The present study considers the interplay between patterns of immigrants’ self-selection and the context of reception (i.e. migration policies and the operation of the labor market) at the host country on different economic assimilation patterns. We compare three groups of immigrants from the Former Soviet Union (FSU) who arrived in Israel and Germany during 1994—2005: Jewish immigrants who arrived in Israel, Jewish immigrants who arrived in Germany (JQR), and ethnic Germans who arrived in Germany (EG). Using the same questionnaire for the German and Israeli samples, we disentangle the impact of the two effects on immigrants’ earnings assimilation by applying the Juhn et al. (1991) method of decomposing the difference in the earnings differentials between natives and FSU immigrants in the two host countries. The results indicate that earnings gaps between FSU immigrants and natives are wider in Germany than in Israel and that the role of contexts of reception is significant in determining patterns of self-selection. We find that the less rigid market attracts the more motivated immigrants, as indicated by the comparison between Jewish immigrant men in Israel and Germany. Within contexts of immigrant reception, the operation of the labor market is more important than formal policies in enhancing economic assimilation of immigrants, as indicated by the comparisons between JQR and EG immigrants in Germany and between Jewish immigrant women in Israel and Germany.