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JEL Codes: J240, J310, J 620, F22 In a recent study, using data on adult men in the United States, Chiswick and Miller (2007) argue that insights into the labour market adjustment of immigrants can be gained through estimation of earnings equations that take account of occupational status.2 Equations that also include controls for occupation show the role that occupation has as an intermediary between immigrants’ human capital skills and their earnings. Nearly 60 percent of immigrants’ earnings gains in the US can be attributed to inter-occupational earnings differences, with just over 40 percent to intra-occupational differences, in contrast to 55 or 45 percent for native-born men in the US. The analyses are restricted to males aged 20-64 who were employed on a full-time basis (i.e., they worked 35 or more hours per week) in the week before Census night and who reported positive weekly earnings. Appendix B contains definitions of all variables and a table of means and standard deviations. Each of these extensions controls for the occupational earnings structure, albeit at different levels of detail. The coefficients on the variables for occupation provide information on the effect on earnings of employment in the particular occupation. This is a direct effect of occupation on earnings. With occupation held constant, the coefficients of the other explanatory variables reflect their effect on earnings within occupations. Hence, comparison of the estimates in the equation with the occupation variables with estimates from the benchmark equation (1) provide information on the effect of these variables on earnings through intra- and inter-occupational change. Among immigrants from non-English-speaking countries, however, the payoff to a year of schooling falls from 5.8 to 2.0 percent when account is taken of employment in the 44 occupations. This is a 66 percent reduction in the payoff to schooling. In other words, two-thirds of the payoff to schooling for immigrants from non-English-speaking countries is associated with access to higher paying occupations. Schooling is indicated here as being of far greater importance for earnings via occupational change for immigrants from non-English-speaking countries than it is for immigrants educated in Australia or other English-speaking countries.
Notes: (a) Heteroscedasticity-consistent ‘t’ statistics in parentheses; (b) specification (i) is the benchmark model that does not contain information on occupation, specification (ii) contains dichotomous variables for the Major Group occupations, while specification (iii) contains dichotomous variables for the more detailed (44) Census occupational categories; (c) = Variables not entered; (d) = The omitted category for the Speaks English variable is “Speaks only English” and that for the Year of Arrival variable is “After 1995”; (e) NI = Occupation Not Included, INC = Occupation Included.
Source: 2001 Australian Census of Population and Housing.
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