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Immigrant-Native differences in earnings mobility processes

TitleImmigrant-Native differences in earnings mobility processes
Year of Publication2014
AuthorsAhmad, N., Esmaeilzadeh R., and Hansen J.
JournalReview of Economics and Finance
Pages13 - 32
Keywordsdiscrete factor approximation, earnings mobility process, immigrants and natives, quartile mobility rates, spurious and structural state dependence

This study compares the earnings mobility between immigrants and natives within and between Denmark and Canada. Both countries have different labour market conditions and immigration history which leads to an interesting comparison of earning mobility processes. The paper employs a dynamic multinomial logit model with discrete factor approximation for the specification of unobserved individual heterogeneity. The model takes into account the effect of the endogenous initial conditions problem and unobserved heterogeneity to separate structural and spurious state dependence. The results show that immigrants - native differences in earnings mobility, structural state dependence, and segmentation of earnings distribution are relatively more prominent in Denmark compared to Canada.

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