Ethnic Diversity and Labor Market Success

• Applicant: Professor Dr. Klaus F. Zimmermann
• Subject Area: Economic Theory
• Term: from 2008 to 2011
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 84108407

The project develops a new concept of measuring and evaluating the ethnic identity of individuals, models its determinants and explores its explanatory power for labour market performance. Previous work has measured migrant two-dimensional ethnic identity and studied its causes and the consequences for economic behaviour in a cross-sectional empirical setting. The proposed new research makes use of the German Socioeconomic Panel (GSOEP) data to explore the dynamic evolution of the absorption process at the labour economic level among migrants in Germany in the context of ethnic and social networks. It also involves natives into the ethnic identity framework and compares them to individuals with a migrant background (including actual migrants) in the new IZA Unemployment Evaluation Data Set (UEDaS).The two-dimensional concept of ethnic identity has classified migrants into four states: integration, assimilation, separation and marginalization. It has found that ethnic identities are strongly determined by pre-migration characteristics and are de facto exogenous to economic behaviour. Assimilation and integration exert a strong positive impact on economic performance, while the effects of ethnic separation and marginalization are negative.The projects seeks to generalize these findings by (i) using the 25 GSOEP waves for a dynamic absoption study of the migrants including their involvement in social networks, (ii) applying the concept also to the natives and comparing it to individuals with a migration background exploiting the UEDaS, and (iii) extending the analysis from wages and employment to the duration of unemployment and reservation wages.

• DFG Programme: Priority Programmes
• Subproject of: SPP 1169: Flexibility in Heterogeneous Labour Markets