Vlerchan
March 31st, 2016, 06:43 PM
OK. I’ll admit it, that title is misleading. It should, in fact, be Terrorism and Inflexibilities in National Labour Markets. But ‘minimum wage’ both sounds sexier and is relevant to political goings-on in the United States.
Countries with more centralized wage bargaining, stricter product market regulation and countries with a higher union density, have worse labour market outcomes for their immigrants relative to natives even after controlling for compositional effects.
Huber (2015) What Institutions Help Immigrants Integrate, Work Package 103 MS18 “Policy paper on implications of migration policies” Working Paper no 77.
In general, ‘reduced flexibility increases the negative impact of immigration’ (Angrist and Kugler 2001). That shouldn’t come as a surprise. If making errors in hiring (hiring ‘lemons’) is more expensive, and there’s more uncertainty associated with hiring immigrants or those outside one’s culture, in the same vein there’s more associated with hiring younger people, then reduced hiring will be pass-on in-large to those with greater uncertainties attached. That makes sense, the expected costs of those with greater uncertainties attached is higher that the expected cost of those without.
There’s a paper I like called Bertrand and Mullainathan (2003), which without going into excessive detail, concludes that black people get less interviews than white people, given the same skills. There’s a number of different ways to interpret this paper: (1) employers are prejudiced, (2) employers are taking note of the higher number of potential lawsuits, and thus blacks are screen-out when equivalent matches are presented. In simple terms, if (2) is correct, and the likelihood is that it explains some amount, the expected costs of black hirees is higher than the expected cost of white hirees, factoring in uncertainties.
Now, anti-discrimination legislation is just one example (and, to note, I don’t mean to infer here that costs outweigh gains as a matter of fact; in a number of cases it produced significant gains). Others include the likes of legislation hindering employers from firing, legislation that reduces temporal flexibility, legislation that reduces the scope of possible wage adjustment, and so on. The likelihood is that there is also some base cost, associated with the opportunity cost of a failed search.
Then, too, the minimum wage. This increases the potential costs of hiring ‘lemons’, and a disproportionate increase in the expected cost is attached to immigrant workers. The likelihood is that this effect isn’t as powerful as the impact of the likes of centralised bargaining processes or restrictions on firing. Nonetheless, it’s worth considering, as an increasing number of states - weighted towards towards with higher immigrant populations, it seems - adopts 15$/h minimum wages.
In conclusion, labour market participation is important in enabling the integration of immigrant workers. It is, in particular, important from those immigrants, such as Muslims, that tend to self-segregate, and the likelihood is scarcely engage with natives; and, vice-versa. There’s a clear trend, documented in the literature, of more restrictive labour market institutions resulting in worse outcomes for immigrants, less integration; and thus, worse outcomes for natives (Putnam 2000). The overwhelming likelihood is that it’s not a sole determinant; but, it remains, at the same time, an entirely ignored perspective in the debate that, really, should be discussed.
Countries with more centralized wage bargaining, stricter product market regulation and countries with a higher union density, have worse labour market outcomes for their immigrants relative to natives even after controlling for compositional effects.
Huber (2015) What Institutions Help Immigrants Integrate, Work Package 103 MS18 “Policy paper on implications of migration policies” Working Paper no 77.
In general, ‘reduced flexibility increases the negative impact of immigration’ (Angrist and Kugler 2001). That shouldn’t come as a surprise. If making errors in hiring (hiring ‘lemons’) is more expensive, and there’s more uncertainty associated with hiring immigrants or those outside one’s culture, in the same vein there’s more associated with hiring younger people, then reduced hiring will be pass-on in-large to those with greater uncertainties attached. That makes sense, the expected costs of those with greater uncertainties attached is higher that the expected cost of those without.
There’s a paper I like called Bertrand and Mullainathan (2003), which without going into excessive detail, concludes that black people get less interviews than white people, given the same skills. There’s a number of different ways to interpret this paper: (1) employers are prejudiced, (2) employers are taking note of the higher number of potential lawsuits, and thus blacks are screen-out when equivalent matches are presented. In simple terms, if (2) is correct, and the likelihood is that it explains some amount, the expected costs of black hirees is higher than the expected cost of white hirees, factoring in uncertainties.
Now, anti-discrimination legislation is just one example (and, to note, I don’t mean to infer here that costs outweigh gains as a matter of fact; in a number of cases it produced significant gains). Others include the likes of legislation hindering employers from firing, legislation that reduces temporal flexibility, legislation that reduces the scope of possible wage adjustment, and so on. The likelihood is that there is also some base cost, associated with the opportunity cost of a failed search.
Then, too, the minimum wage. This increases the potential costs of hiring ‘lemons’, and a disproportionate increase in the expected cost is attached to immigrant workers. The likelihood is that this effect isn’t as powerful as the impact of the likes of centralised bargaining processes or restrictions on firing. Nonetheless, it’s worth considering, as an increasing number of states - weighted towards towards with higher immigrant populations, it seems - adopts 15$/h minimum wages.
In conclusion, labour market participation is important in enabling the integration of immigrant workers. It is, in particular, important from those immigrants, such as Muslims, that tend to self-segregate, and the likelihood is scarcely engage with natives; and, vice-versa. There’s a clear trend, documented in the literature, of more restrictive labour market institutions resulting in worse outcomes for immigrants, less integration; and thus, worse outcomes for natives (Putnam 2000). The overwhelming likelihood is that it’s not a sole determinant; but, it remains, at the same time, an entirely ignored perspective in the debate that, really, should be discussed.