Real Exchange Rates and the Earnings of Immigrants

Christian Dustmann, Hyejin Ku and Tetyana Surovtseva ()

No 16390, IZA Discussion Papers from IZA Network @ LISER

Abstract: We relate origin-destination real price differences to immigrants' reservation wages and their career trajectories, exploiting administrative data from Germany and the 2004 enlargement of the European Union. We find that immigrants who enter Germany when a unit of earnings from Germany allows for larger consumption at home settle for lower entry wages, but subsequently catch up to those arriving with less favourable exchange rates, through transition to better-paying occupations and firms. Similar patterns hold in the US data. Our analysis offers one explanation for the widespread phenomenon of immigrants' downgrading, with new implications for immigrant cohort effects and assimilation profiles.

Keywords: immigrant downgrading; reservation wage; real exchange rate; earnings assimilation (search for similar items in EconPapers)
JEL-codes: J24 J31 J61 O15 O24 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2023-08
New Economics Papers: this item is included in nep-eur, nep-int, nep-lab, nep-opm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Economic Journal, 2024, 134 (657), 171 - 294

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https://docs.iza.org/dp16390.pdf (application/pdf)

Related works:
Journal Article: Real Exchange Rates and the Earnings of Immigrants (2024)
Journal Article: Real Exchange Rates and the Earnings of Immigrants (2023)
Working Paper: Real Exchange Rates and the Earnings of Immigrants (2023)
Working Paper: Real Exchange Rates and the Earnings of Immigrants (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp16390

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