How Elastic is the Labour Supply of Female Migrants Relative to the Labour Supply of Female Natives?
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How Elastic is the Labour Supply of Female Migrants Relative to the Labour Supply of Female Native? Tanja Fendel1
© The Author(s) 2020
Abstract This study estimates the wage elasticities of migrants and natives by using data from the German Socio-Economic Panel from 1984 to 2015 and a grouping instrumental variable estimator. Female migrants who live with a partner have lower own- and cross-wage elasticities than respective female natives, and the elasticities of nonWestern female migrants are insignificant. The relationship between participation and elasticity is not in all cases positive, but parallel to labour market integration, the time since migration increases the elasticities of women. Elasticities indicate the potential to increase participation; therefore, it is especially important for non-Western female migrants to remove barriers to flexible wage responses. Keywords Labour supply behaviour of women · Migration · Grouping estimator JEL Classification F22 · J22
1 Introduction The labour market integration of women is much more problematic among migrants than natives, especially non-Western migrant women. The differences in the participation rates between female migrants and natives are much higher than those between male migrants and natives (Fig. 1). Many studies provide empirical evidence of the negative impact of migration on female migrants’ labour market performance or earnings (see Blau et al. 2011; Cooke et al. 2009; Clark and Withers 2002;
* Tanja Fendel [email protected] 1
Institute for Employment Research (IAB), Regensburgerstr. 104, 90478 Nuremberg, Germany
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LeClere and McLaughlin 1997). However, the literature concerning migrant women’s responses to financial incentives and, therefore, the elasticities of labour supply is very limited.1 Knowledge regarding the elasticities of labour supply has high political and, therefore, high academic importance. The previous literature mainly considers labour supply elasticities to indicate the magnitude of the efficiency cost of income taxation or determine the employment impact of reforms in redistributive tax-benefit systems (Evers et al. 2008). Nevertheless, labour supply elasticities are also highly relevant for integration policy. The participation rate is an indicator of the success of labour market integration, whereas labour supply elasticities indicate the extent to which a population group is responsive to financial incentives. A high own-wage elasticity observed with a low participation rate indicates the potential to increase labour participation and, therefore, is an important mechanism for the labour market integration of migrants. Previous studies generally find that married women have the largest own-wage elasticities and that men have smaller own-wage elasticities. As reviewed by Steiber and Haas (2012), on average, men’s employment behaviour is very stable across the life course; most men work full-time. Women’s life course trajectories are much more heterogeneous due to child birth or ot
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