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Title: Reservation Wages of First and Second Generation Migrants

Author(s): Amelie Constant, Annabelle Krause, Ulf Rinne and Klaus F Zimmermann

Publication Date: January 2011

Keyword(s): ethnic identity, ethnosizer, Germany, job search, migration, reservation wages and unemployment

Programme Area(s): Labour Economics

Abstract: This paper analyzes the reservation wages of first and second generation migrants. Based on recently collected and rich survey data of a representative inflow sample into unemployment in Germany, we empirically test the hypothesis that reservation wages increase from first to second generation migrants. Two extensions of the basic job search model, namely an unknown wage offer distribution and different reference standards, provide theoretical justifications for this conjecture. In both extensions, changing frames of reference are identified as a channel through which the phenomenon of increasing reservation wages may arise. In as far as language skills or self-evaluated returns to characteristics reflect a person?s frames of reference, we find empirical support for this mechanism to be present.

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Bibliographic Reference

Constant, A, Krause, A, Rinne, U and Zimmermann, K. 2011. 'Reservation Wages of First and Second Generation Migrants'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8208