Hysteresis and the earnings of immigrants in the United States labour market

Abstract

The paper analyses the role of hysteresis in explaining the slow wage convergence between certain immigrant groups and native workers. Using the 1990 Integrated Public Use Microdata Samples (IPUMS), the analysis reveals that past earnings history in the country of origin has a relatively smaller effect on post-migration earnings when compared to past earnings history in the US. In addition, the paper suggests that the earnings history in the country of origin is more productive in the US labour market for immigrants from advanced economies as compared to those from less-developed countries. In particular, we find that US labour market does not value the past earnings history of Mexican immigrants as high as that of other ethnic groups with similar socioeconomic characteristics across successive cohorts.