Ethnicity and Labor Market Outcomes: Volume 29

In many countries today, immigrants and other distinct ethnic minorities experience high unemployment, low employment rates, lower education levels, and lesser earnings in comparison to natives. While differences in the labor market attachment and performance of immigrants can be partially explained by human capital, time spent in the host country, nationality or country of origin, and other demographics, there is still a native–immigrant gap that remains to be explained. Studying ethnic identity is not a trivial task. Complex issues of identification and measurement can surface along the way.

Upon arrival in the host country, immigrants undergo a fundamental identity crisis. Their ethnic identity being questioned, they can be classified into four states – assimilation, integration, separation, and marginalization. This is suggested by the ethnosizer, a newly established measure to parameterize a person's ethnic identity, using individual information on language, culture, societal interaction, history of migration, and ethnic self-identification. In what state individuals end up varies among immigrants even from the same country. Moreover, the quest for ethnic identity affects women and men differentially. This paper contends that ethnic identity can significantly affect the attachment to and performance of immigrants in the host country labor market, beyond human capital and ethnic origin characteristics. Empirical estimates for immigrants in Germany show that ethnic identity is important for the decision to work and significantly and differentially affects the labor force participation of men and women. Women who exhibit the integrated identity are more likely to work than women who are German assimilated; this does not hold for men. However, once we control for selection in the labor market and a slew of individual and labor market characteristics, ethnic identity does not significantly affect the earnings of men or women immigrant workers.

Using microdata from the 2000 US Census, we analyze the responses of Mexican Americans to questions that independently elicit their “ethnicity” (or Hispanic origin) and their “ancestry.” We investigate whether different patterns of responses to these questions reflect varying degrees of ethnic attachment. For example, those identified as “Mexican” in both the Hispanic origin and the ancestry questions might have stronger ethnic ties than those identified as Mexican only in the ancestry question. How US-born Mexicans report their ethnicity/ancestry is strongly associated with measures of human capital and labor market performance. In particular, educational attainment, English proficiency, and earnings are especially high for men and women who claim a Mexican ancestry but report their ethnicity as “not Hispanic.” Further, intermarriage and the Mexican identification of children are also strongly related to how US-born Mexican adults report their ethnicity/ancestry, revealing a possible link between the intergenerational transmission of Mexican identification and economic status.

We often observe minority ethnic groups at a disadvantage relative to the majority. Why is this and what can be done about it? Efforts made to assimilate, and time, are two elements working to bring the minority into line with the majority. A third element, the degree to which the majority welcomes the minority, also plays a role. We develop a simple theoretical model useful for examining the consequences for assimilation and harassment of growth in the minority population, time, and the role of political institutions. Over time, conflicts develop within the minority group as members exhibit different interests in assimilating and in maintaining their cultural identity. We discuss how this affects the minority's position over time and the influence of public policy.

This study develops and estimates a model of the naturalization process in the United States. The model is based on both the characteristics of immigrants and features of their countries of origin, both of which are shown to be important determinants of citizenship status. The empirical analysis is based on the 2000 US Census. The individual characteristics that have the most influence are educational attainment, age at migration, years since migration, veteran of the US Armed Forces, living with a family, and spouses' educational attainment. The country of origin variables of most importance are their degree of civil liberties and political rights, GDP per capita, whether the origin country recognizes dual citizenship, and the geographic distance of the origin from the United States.

Dual nationality rights have been historically viewed with suspicion in immigrants' receiving countries, on the grounds, among other reasons, that they impede immigrants' assimilation. The debate around dual nationality, however, has taken place largely in the absence of empirical evidence. This paper fills this gap by exploring how recognition of dual nationality rights by sending countries affects assimilation of immigrants already residing in the United States. In the 1990s, Colombia, the Dominican Republic, Ecuador, Costa Rica, and Brazil passed dual citizenship laws granting their expatriates the right to naturalize in the receiving country without losing their nationality of origin. On data from the 1990 and 2000 US censuses, immigrants recently granted dual nationality rights are found to be more likely to naturalize relative to immigrants from other Latin American countries. They also experience employment gains and drops in welfare use, suggesting that dual citizenship rights may promote economic assimilation. The effects are the largest among more educated individuals, who also experience earnings gains and an increased likelihood to be homeowners. These findings are consistent with education being correlated with higher career and income benefits from transnational activities. Finally, when studying the effects of dual citizenship on marriage and fertility, we find a negative impact on the number of young children living in the home, suggesting that also in this respect assimilation to US norms is taking place.

The labor market behavior of ethnic communities in advanced societies and the social determinants of their labor market outcomes are important empirical issues with significant policy consequences. We use direct information on social interactions within multiple-origin ethnic minorities in England and Wales to investigate the ways different network-based social ties influence individual employment outcomes. We find that (i) “strong ties,” measured by contacts with parents and children away, increase the probability of self-employment, while “weak social ties,” measured by engagement in voluntary organizations, are more likely to channel members of ethnic minorities into paid employment; (ii) “ethnic networks,” measured by interactions between individuals of the same ethnicity, are positively associated with the likelihood to be self-employed, while engagement in mixed or nonethnic social networks facilitates paid employment among minority individuals. These findings hint at a positive role of social integration in the host society on labor market outcomes of ethnic minority groups.

This paper analyzes causes of the low self-employment rate among Mexican-Americans by studying self-employment entry and exits utilizing panel data from the Survey of Income and Program Participation (SIPP). Our results indicate that differences in education and financial wealth are important factors in explaining differences in entrepreneurship across groups. Importantly, we analyze self-employment by recognizing heterogeneity in business ownership across industries and show that a classification of firms by human and financial capital intensiveness, or entry barriers, is effective in explaining differences in entrepreneurship across ethnic groups.

Using unique register data for Sweden we match self-employed persons to their employees. The purpose of the paper is to investigate which factors that influence the composition of the workforce in terms of national background. To analyse workforce composition we estimate the probability of only employing co-nationals in the firm. A majority of the self-employed do not have employees so the used sample constitutes a small share of all self-employed. To account for the selection in the choice of having employees we estimate a selection model of Heckman type.

We find that a higher share of immigrants in the municipality increases the probability of hiring immigrants, both for native and immigrant self-employed. We also find that the probability for immigrants to only employ co-nationals decreases with time spent in Sweden. These results point to that the proximity to people from the same region and one's network plays an important part for the employment decisions for the self-employed.

This paper investigates the effect of a native spouse on the transitions into and out of entrepreneurship of male immigrants in the United States. We find that those married to a native are less likely to start up a business compared to those married to an immigrant. This finding is robust when the endogeneity of being married to a native is taken into account. We also show that immigrants married to a native are significantly less likely to exit from entrepreneurship compared to their counterparts who are married to an immigrant. Our results point to an interesting asymmetric role of being intermarried in deciding to become an entrepreneur and for survival in entrepreneurship, which is consistent with a network effect. On the one hand, intermarriage reduces the chance of starting up a business possibly because better access to local networks can help transitions into other forms of employment (e.g., paid employment). On the other hand, superior access to local networks through marriage to a native facilitates business survival.

A common perception about immigrant assimilation is that association with natives necessarily speeds the process by which immigrants become indistinguishable from natives. Using 2000 Census data, this paper casts doubt on this presumption by examining the effect of an immigrant's marriage to a native, a measure of social integration, on dropout rates of children from these marriages. Although second-generation immigrants with one native parent generally have lower dropout rates than those with two foreign-born parents, the relationship reverses when steps are taken to control for observable and unobservable background characteristics. That is, immigrants that marry natives have children that are more likely to drop out of high school than immigrants that marry other immigrants. Moreover, gender differences in the effect of marriage to a native disappear in specifications which control for the endogeneity of the marriage decision.

This paper focuses on two issues, firstly the extent to which the employment position of the main ethnic minority groups in England and Wales changed between 1991 and 2001 and secondly, a detailed examination of employment rates amongst ethnic groups in 2001. Relative to Whites, the employment position of most ethnic minority groups improved over the period, especially for males. Some of this improvement was due to enhanced levels of observable characteristics. However, the employment gap between Whites and some ethnic minority groups remains extremely large. Educational qualifications, religion and local deprivation are found to be important influences on employment for many minority groups. We conclude by discussing the policy implications of these findings.

Using matched data from the 1996 to 2004 Current Population Survey (CPS), we examine racial patterns in annual transitions into and out of health insurance coverage. We first decompose racial differences in static health insurance coverage rates into group differences in transition rates into and out of health insurance coverage. The low rate of health insurance coverage among African-Americans is due almost entirely to higher annual rates of losing health insurance than whites. Among the uninsured, African-Americans have similar rates of gaining health insurance in the following year as whites. Estimates from the matched CPS also indicate that the lower rate of health insurance coverage among Asians is almost entirely accounted for by a relatively high rate of losing health insurance. In contrast to these findings, differences in health insurance coverage between Latinos and whites are due to group differences in both the rate of health insurance loss and gain. Using logit regression estimates, we also calculate nonlinear decompositions for the racial gaps in health insurance loss and gain. We find that two main factors are responsible for differences in health insurance loss between working-age whites and minorities: job loss and education level. Higher rates of job loss account for 30 percent of the health insurance gap for African-Americans and Asians, and 16 percent of the health insurance gap for Latinos. Lower levels of education explain roughly 15 percent of the gap for African-Americans and Latinos (Asians' higher levels of education serve to close the gap). Higher rates of welfare and SSI participation among African-Americans also serve to widen the gap in health insurance loss by 8 percent.