Immigrant Earnings, Relative to What? The Importance of Earnings Function Specification and Comparison Points

A M Yuengert

Journal of Applied Econometrics, 1994, vol. 9, issue 1, 71-90

Abstract: Immigrant relative earnings estimates are sensitive to the choice of comparison point and the specification of earnings. Non-sample mean comparisons (Borjas, 1985) understate relative earnings. Simple earnings specifications (linear education, quadratic experience) overstate relative earnings for both poorly and well-educated immigrants. Specifications which ignore omitted variables understate the relative earnings of poorly educated immigrants and overstate those of well-educated ones. Although measures of assimilation and changes in immigrant quality are insensitive to earnings specification, they indicate strong earnings growth for post-1964 immigrants, an overall decrease in immigrant quality, and an increase in Mexican immigrant quality. Copyright 1994 by John Wiley & Sons, Ltd.

Date: 1994
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