CAPÍTULO III: LOCALIZACIÓN DE PLANTA
3.3. Evaluación y selección de la localización
3.1.2. Evaluación y selección de la microlocalización
In this paper we use Labour Force Survey data to document the impact of arrival year economic conditions and assimilation on the labour market outcomes of immigrants to the UK. The innovative features of our work include the separate analysis of immigrants who arrive in the UK to enter the labour market from those who enter education, the investigation of arrival year economic conditions on labour market outcomes for immigrants and the use of a semi-parametric method to estimate assimilation profiles. Below we summarise and discuss our key results.
Earnings for white and non-white immigrants, whether labour market entrants or entrants to education, rise during the early years of their stay in the UK. The levels of earnings and the rate of change differ substantially across immigrant ethnicity and type, nevertheless, compared to a baseline or typical native, there is evidence of positive earnings assimilation in the UK labour market. Annual rates of earnings growth over the first 15 years in the UK, based on the semi-parametric profiles in Figure 2(a) and computed to be net of secular wage growth and inflation, are around 1.0% for non-whites and 1.1% for whites. Assimilation is particularly strong for white entrants to education once they reach the labour market: based on the profiles in Figure 3(a), real weekly earnings are predicted to double in around 11 years.
This compares to over 40 years for non-white immigrants.
Earnings levels for non-whites fall short of those for whites, whether for immigrant or native workers, and this is a recurring theme of the paper, emerging in the raw data and the regression estimates. If we consider the gap between the earnings of an immigrant beginning their labour market career and a comparison, typical, native worker, the initial gap is around
0.15 log points larger for non-whites and takes 16 years longer to close. Ethnic wage gaps are recognised as an enduring feature of the UK labour market and our results suggest that Pakistani and Caribbean immigrants who enter the labour market directly encounter a particular disadvantage, although they assimilate and overtake natives after 15-20 years.
Compared to their native counterparts, Black African and Pakistani workers fare better than Caribbeans and Indians.
The one optimistic note for non-white immigrants concerns those who entered the UK prior to the completion of their education. While assimilation profiles are less steep for non-white education entrants compared to whites, such immigrants do experience strong returns to their UK education as evinced by the entry-level earnings displayed in Figure 3(b). Sufficient UK schooling can completely wipe out the disadvantage faced by non-white immigrants as they enter the labour market. Our measure of schooling (years in education) is somewhat crude, due to data limitations, and future work could profitably establish what types of educational investment underlie these high returns for non-white immigrants.
Our results pertaining to employment assimilation were more mixed. Amongst labour market entrants, whites exhibited positive assimilation with employment rates rising with time since migration. This was also the case for white and non-white education entrants. For non-white labour market entrants, however, the relationship was negative with a pronounced fall off in predicted employment rates around 16 years after migration. This observation can mainly be attributed to South Asian immigrants, since Black African and Caribbean immigrants fare much better than their native counterparts in the long-run.
Dis-assimilation for particular immigrant groups has been found in the UK before: Bell (1997) observed earnings dis-assimilation for white immigrants and postulated that selective re-migration was the explanation. The issue of re-migration is difficult to address in the absence of detailed administrative records or panel data with sufficiently large immigrant samples, however Rendall and Ball (2004) have suggested that as many as half of all recent immigrants to the UK emigrate again within 5 years. However, they also find that the countries previously sending many non-white immigrants to the UK (the Indian sub-continent and Commonwealth Caribbean) have significantly lower rates of re-migration than countries, which are the source of white immigrants. It therefore seems unlikely that selective re-migration is wholly responsible for the patterns observed here and we posit an alternative explanation. Many non-white immigrants to the UK were recruited directly to public sector employment in the 1950s and 1960s. We would expect such immigrants to have very low unemployment risk on arrival and in the next few years. As time goes by this group would experience shocks and an ‘equilibrium’ rate of unemployment for those individuals given their skills and market opportunities would be established. Such a view would be consistent with some employment dis-assimilation as we observe.
As a final comment on our assimilation results it is worth pointing to some important differences between our results and those of previous studies. Both Bell (1997) and Dustmann et al. (2003) find positive earnings assimilation profiles for non-whites and negative profiles for some white groups. However these authors compute their assimilation profiles differently to us - comparing immigrants and natives who are both on rising earnings profiles - and they use different comparison groups of natives. Furthermore they do not estimate separate regression models for natives and immigrants. Borjas (1994) notes how alternative methodologies have led to conflicting estimates of the extent of assimilation for
Mexican workers in the US hence estimates of assimilation must be interpreted in the light of the modelling decisions made by the researchers in question. We have focussed on immigrants’ returns to UK experience and UK schooling on the basis that these are the fundamental drivers of immigrant labour market outcomes.
The second main hypothesis that we investigate is whether aggregate economic conditions at the time immigrants enter the labour market can have a permanent impact on their labour market success. There is some evidence that non-white immigrants who arrive in the UK at times of high unemployment and immediately enter the labour market suffer an earnings penalty compared to those who arrive in years of lower unemployment. Arguably, non-white labour market entrants might be expected to be more susceptible to the scarring effect of unemployment than other types of immigrant if employers have less information about their qualifications and backgrounds than they would about white immigrants who originate in countries with education systems and labour markets similar to the UK. For other immigrant groups, and in models where we use the growth rate as the indicator of aggregate economic conditions, the results are either insignificant or, counter intuitively, suggest that a poorer macroeconomic environment has a permanent, positive impact on immigrant outcomes.
There is no consensus in the empirical literature on the size, sign or significance of immigrant arrival effects, however this may be due to data limitations: panel data for the UK have been used to provide convincing evidence of unemployment scarring for native workers (Arulampalam, 2001). It is probably asking a lot of our data, using a single aggregate annual unemployment or growth rate as an indicator of individual employment risk, to uncover scarring effects. In other countries, where administrative records allow large samples of immigrants to be analysed, important linkages between aggregate or local labour market
conditions and immigrant outcomes have been observed (Aslund and Rooth, 2003; Barth et al., 2004).
One further caveat which should be mentioned is the absence of data on English language ability in the Labour Force Survey. Using other data sources Dustmann and Fabbri (2003) and Lindley (2002) demonstrate the important association between language proficiency and labour market success. Differences in language ability between ethnic groups may go some way to explaining the ethnic differences we observe.
From a policy perspective assimilation matters if immigrants are expected by the host country to, in the Prime Minister’s words, “support themselves”. Evidence of a significant and persistent failure of immigrant labour market outcomes to approach those of natives could be used to bolster estimates of the economic cost of immigration. There is little evidence in our results that, taken as a whole, immigrants in the UK labour market systematically fail to reach high levels of success. Clearly there are caveats to this. First, we only observe those immigrants who make it to the labour market and do not observe non-participants or those operating in the shadow economy. Second, patterns of immigration are constantly changing in response to international developments and host country policy changes, hence we should be wary of extrapolating from what previous immigrant cohorts experienced to the performance of future cohorts. Nevertheless, the large differences in outcomes that we do observe are related as much to ethnicity rather than immigrant status per se, and it would seem to be here that appropriate policy measures would be most effective.
Table 1. Sample Means of Key Variables by Immigration and Ethnic Status.
QLFS 1993-2002
Natives Immigrants: Labour Market Entrants
N 204338 3382 4046 4115 4356 3000 223237
N for employed and
positive wage
146719 1809 2481 2185 3054 1734 157982
Notes: Standard deviations in parentheses.
* For the sample of immigrants only.
Table 2. Returns to Human Capital: OLS Regression Results (a) Log Gross Weekly Earnings
Immigrants Native Born
Labour Market
(b) Employment Status
Immigrants Native Born
Labour Market
1. The returns to experience are based on a quadratic specification and are computed at the sample mean of the experience variable (foreign or UK) for the relevant group.
The coefficients are based on separate regressions for each group containing the following additional explanatory variables: a time trend (survey year), immigrant cohort dummy variables, marital status, regional dummy variables, a manufacturing dummy and, for the non-white regressions, ethnic group dummy variables. For the immigrant equations the coefficient on the time trend variable is constrained to be equal to that for the white native group.
2. The table reports estimated coefficients and standard errors. ** indicates significance at the 5% level or lower while * indicates significance at between the 10% and 5%
level.
Table 3. Arrival Year Effects: Earnings
Immigrants Labour Market Entrants Education Entrants
White Non-White White Non-White
1. The table contains estimated coefficients and standard errors based on a parametric (quadratic) specification of equation (1) with cohort dummies replaced by the aggregate-level variables.
2. * indicates statistical significance at between 5 and 10% while ** indicates significance at 5 % or lower.
Table 4. Arrival Year Effects: Employment
Immigrants Labour Market Entrants Education Entrants
White Non-White White Non-White Model 1
1. The table contains estimated coefficients and standard errors based on a parametric (quadratic) specification of equation (1) with cohort dummies replaced by the aggregate-level variables.
2. * indicates statistical significance at between 5 and 10% while ** indicates significance at 5 % or lower.
Figure 1. Experience Profiles: Native Born
(a) Earnings
Log Earnings
UK Experience
Non-White Natives (Semi-P) White Natives (Semi-P) Non-White Natives (Quadratic) Non-White Natives (Quadratic)
0 10 20 30 40 50
5 5.5 6
(b) Employment
Employment Probability
UK Experience
Non-White Natives (Semi-P) White Natives (Semi-P) Non-White Natives (Quadratic) Non-White Natives (Quadratic)
0 10 20 30 40 50
.4 .6 .8 1
Figure 2. Assimilation: Labour Market Entrants
(a) Earnings
Log Earnings
Years Since Migration
White Natives Non-White Natives
White Immigrants Non-White Immigrants
0 10 20 30 40 50
5.4 5.6 5.8 6
(b) Employment
Employment Probability
Years Since Migration
White Natives Non- White Natives
White Immigrants Non-White Immigrants
0 10 20 30 40 50
.7 .8 .9 1
Figure 3. Assimilation Profiles by Ethnic Group
(a) Earnings
Immigrant Wage Premium (relative to same ethnic group natives)
Years Since Migration
Caribbean Black African
Indian Pakistani
0 10 20 30 40 50
-.5 0 .5
(b) Employment
Immigrant Employment Advantage (relative to same ethnic group natives)
Years Since Migration
Caribbean Black African
Indian Pakistani
0 10 20 30 40 50
-.4 -.2 0 .2 .4
Figure 4. Assimilation: Education Entrants
(a) White Earnings
Log Earnings
Years Since Migration
Type I Type II
Type III Type IV
0 10 20 30 40 50
5 5.5 6 6.5
(b) Non-White Earnings
Log Earnings
Years Since Migration
Type I Type II
Type III Type IV
0 10 20 30 40 50
5.6 5.8 6 6.2
(c) White Employment
Employment Probability
Years Since Migration
Type I Type II
Type III Type IV
0 10 20 30 40 50
.7 .8 .9 1
(d) Non-White Employment
Employment Probability
Type I Type II
Type III Type IV
0 10 20 30 40 50
.8 .9 1 1.1
REFERENCES
Antecol, H., P. Kuhn and S. Trejo (2003), Assimilation via Prices or Quantities? Labor Market Institutions and Immigrant Earnings Growth in Australia, Canada and the United States, IZA Discussion Paper No. 802.
Arulampalam, W. (2001), Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages, Economic Journal, 111, F585-F606.
Arulampalam, W., P. Gregg and M. Gregory (2001), Introduction: Unemployment Scarring, Economic Journal, 111, F577-F584.
Aslund, O. and D-O. Rooth (2003), Do When and Where Matter? Initial Labour Market Conditions and Immigrant Earnings, paper prepared for EALE Conference, Seville, 2003.
Barth, E, B. Bratsberg and O. Raaum (2004), Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions, Scandinavian Journal of Economics, 106, 1-22.
Bell, B.D. (1997), The Performance of Immigrants in the United Kingdom: Evidence from the GHS, Economic Journal, 107, 333-345.
Blackaby, D.H., D.G. Leslie, P.D. Murphy and N.C. O’Leary (1998), The Ethnic Wage Gap and Employment Differentials in the 1990s: Evidence for Britain, Economics Letters, 58, 97-103.
Blackaby, D.H., D.G. Leslie, P.D. Murphy and N.C. O’Leary (2002), White/Ethnic Minority Earnings and Employment Differentials in Britain: Evidence from the LFS, Oxford Economic Papers, 54, 270-279.
Borjas, G. (1985), Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants, Journal of Labor Economics, 3, 463-489.
Borjas, G. (1994), The Economics of Immigration, Journal of Economic Literature, 32, 1667-1717.
Chiswick, B. (1978), The Effect of Americanization on the Earnings of Foreign-Born Men, Journal of Political Economy, 86, 897-921.
Chiswick, B. (1980), The Earnings of White and Coloured Male Immigrants in Britain, Economica, 47, 81-87.
Chiswick, B., Y. Cohen and T. Zach (1997), The Labor Market Status of Immigrants: Effects of the Unemployment Rate at Arrival and Duration of Residence, Industrial and Labor Relations Review, 50, 289-303.
Chiswick, B. and P. Miller (2002), Immigrant Earnings: Language Skills, Linguistic Concentrations and the Business Cycle, Journal of Population Economics, 15, 31-57.
Deaton, Angus S. (1997), The Analysis of Household Surveys: A Microeconometric Approach to Development Policy, Johns Hopkins University Press.
Dustmann, C. and F. Fabbri (2003), Language Proficiency and Labour Market Performance of Immigrants in the UK, Economic Journal, Vol. 113, 695-.???
Dustmann, C., F. Fabbri, I. Preston and J. Wadsworth (2003), Labour Market Performance of Immigrants in the UK Labour Market, Home Office Online Report 05/03, available at http://www.homeoffice.gov.uk.
Hatton, T. (2003), Explaining Trends in UK Immigration, CEPR Discussion Paper, 4019.
Heckman, J. and R. Robb (1985), Using Longitudinal Data to Estimate Age, Period and Cohort Effects in Earnings Equations, in W. Mason and S. Fienberg (eds. ) Cohort Analysis in Social Research: Beyond the Identification Problem, New York: Springer-Verlag.
Kapteyn, A, R. Alessie and A. Lusardi (2003), Explaining the Wealth Holdings of Difference Cohorts: Productivity Growth and Social Security, European Economic Review, forthcoming.
Kossoudji, S. (1989), The Assimilation of Immigrant Workers: Is it a Labor Market Phenomenon?, Journal of Human Resources, 24, 494-527.
Kupper, L., J. Janis, A. Karmous and B. Greenberg (1985), Statistical Age-Period-Cohort Analysis: A Review and Critique, Journal of Chronic Disease, 38, 811-830.
Lindley, J. (2002), The English Language Fluency and Earnings of Ethnic Minorities in Britain, Scottish Journal of Political Economy, 49, 467-487.
MacDonald, J. and C. Worswick (1998), The Earnings of Immigrant Men in Canada: Job Tenure, Cohort and Macroeconomic Conditions, Industrial and Labor Relations Review, 51, 465-482.
Nickell, S. (1980), A Picture of Male Unemployment in Britain, Economic Journal, 90, 307-329.
Rendall, M. and D. Ball (2004), Immigration, Emigration and the Ageing of the Overseas-Born Population in the United Kingdom, Population Trends, Summer No. 116, London: TSO.
Shields, M. and S. Wheatley Price (1998). The Earnings of Male Immigrants in England:
Evidence from the Quarterly LFS, Applied Economics, 30, 1157-1168.
StataCorp (2001), Stata Statistical Software: Release 7.0, Reference Manual H-P, College Station, TX: Stata Corporation.
Stewart, J. and T. Hyclak (1984), An Analysis of Earnings Profiles Among Foreign-Born Men, Review of Economics and Statistics, 66, 292-303.
Wheatley Price, S. (2001), The Unemployment Experience of Male Immigrants in England, Applied Economics, 33, 201-215.
Yatchew, A. (2003), Semiparametric Regression for the Applied Econometrician, Cambridge University Press, Cambridg