Selectivity, Transferability of Skills and Labor Market Outcomes of Recent Immigrants in the United States

Abstract

This dissertation analyzes how immigrants' individual and home country characteristics affect and determine their labor market participation, returns to education and wages in both their country of origin (before migration occurs) and in the United States. The dissertation also estimates the extent to which immigrant skills are transferable to the American labor market. The research is carried out using data from the New Immigrant Survey, released in 2003, supplemented with the Mexican Household Income and Expenditure National Survey and other data sources. The New Immigrant Survey has two specific sets of questions that other surveys do not have. First, it has a detailed set of questions about the socioeconomic experience of the migrants before they left their home country. Secondly, the survey asked participants about their immigrant visa categories, allowing a separation of immigrants into economic migrants (those who came through employment preferences or other categories directly linked to economic objectives) and non-economic migrants (refugees, migrants entering through family preferences, etc., whose direct migration motive was political, family-related, and not directly economic in nature). The dissertation reveals that there exist significant differences between economic and non-economic migrants in the determinants of labor market participation, wages, migration selectivity and transferability of skills. Substantial differences are observed between men and women. Immigrants have low labor participation rates in their country of origin although they are highly educated compared to non-migrants at home. Those from English-speaking and high GDP countries are less likely to work but earn higher wages. Non-economic migrant men are more likely to be employed (than economic migrant men), but their wages do not differ. Among women, both economic and non-economic migrants are just as likely to be employed but non-economic migrant women earn less. Using Mexico as a case study to examine the selectivity of legal immigrants, it was found that documented migrants were less likely to have been employed before migration to the US, but their level of education and wages were significantly higher than those of non-migrants. The individual characteristics of these two groups affect their employment and wage determinants differently. Some of the literature has emphasized how immigrants may be positively selected because of greater motivation, willingness to undertake risks, etc. But, on this basis, most of the existing analysis of the determinants of immigrant wages in the U.S. suffers from omitted variable bias because there are no data for these unobserved characteristics or skills (motivation, persistence, etc.) and they are ignored in the statistical analysis. In an examination of immigrant wages in the U.S., this dissertation used wages earned abroad as a measure of the unobserved skills of the migrants and their level of transferability. An analysis of the determinants of immigrant wages was then carried out,…