Real Exchange Rates and the Earnings of Immigrants

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10625

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials ; Geographic Labor Mobility; Immigrant Workers ; Economic Development: Human Resources; Human Development; Income Distribution; Migration ; Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
• Subject: real exchange rate ; reservation wage ; immigrant downgrading ; earnings assimilation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dustmann, Christian ; Ku, Hyejin ; Surovtseva, Tanya
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/279376
• Last update: 10.03.2025, 11:42 AM CET