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Over the last several decades, two of the most significant developments in the US labor market have been: (1) rising inequality; and (2) growth in both the size and the diversity of immigration flows. Because a large share of new immigrants arrive with very low levels of schooling, English proficiency, and other skills that have become increasingly important determinants of success in the US labor market, an obvious concern is that such immigrants are a poor fit for the restructured American economy. In this chapter, we evaluate this concern by discussing evidence for the United States on three relevant topics: the labor market integration of immigrants, the socioeconomic attainment of the US-born descendants of immigrants, and the impact of immigration on the wages and employment opportunities of native workers. We show that low-skilled immigrants have little trouble finding paid employment and that the wages they earn are commensurate with their skills. Overall, the US-born second generation has achieved economic parity with mainstream society; for some Hispanic groups, however, this is not the case. Finally, we survey the pertinent academic literature and conclude that, on the whole, immigration to the United States has not had large adverse consequences for the labor market opportunities of native workers.

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Thurow’s job-competition model implies that overeducation is contingent upon the differing skill endowments of employees. As yet, only rudimentary evidence has been furnished to confirm this relationship. In the present paper, we test the theory in a more sophisticated manner, by means of a more differentiated survey of the skill endowments of workers. Our analyses are based on the German Life History Study (GLHS), in which longitudinal biographical data was gathered for the West German cohorts born in 1964 and 1971 up until the year of the survey (1998). These data are analysed using a trivariate probit model which takes into account the selective acquisition of school qualifications, and the selective choice of vocational training with varying levels of quality.

Our findings confirm that type and grade of school leaving certificate both have a strong effect on the later risk of overeducation. The quality of vocational training chosen only impacts on the overeducation risk when the strong selectivity effects in certain types of schools and types of vocational training are not taken into account. In line with existing literature, we find that the risk of overeducation decreases with increasing traditional skill measures such as experience, tenure, on-the-job-training, and further education. In sum, our results clearly confirm the capacity of the job-competition model to explain the persistence of overeducation in the labour market.

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The tertiary-secondary (college-high school) wage premium has been increasing in India over the past decade, but the increase differs across age groups. The increase in wage premium has been driven mostly by younger age groups, while older age groups have not experienced any significant increase. This paper uses the demand and supply model with imperfect substitution across age groups developed in Card and Lemieux (2001) to explain the uneven increase in the wage premium across age groups in India. The findings of this paper are that the increase in the wage premium has come mostly from demand shifts in favor of workers with a tertiary education. More importantly, the demand shifts occurred in both the 1980s and 1990s. Relative supply has played an important role not only determining the extent of increase in wage premium, but also its timing. The increase in relative supply of tertiary workers during 1983-1993 offset the demand shift, limiting the wage premium increase. But during 1993-1999, the growth rate of the relative supply of tertiary workers decelerated, while relative supply was virtually stagnant during 1999-2004. Both of these periods saw an increase in the wage premium as the countervailing supply shift was weak.

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The paper studies the dynamic change of the migrant labor market in China from 2002 to 2007 using two comparable data sets. Our focus is on the rural-urban migration decision, the wage structure of migrants, the urban labor market segmentation between migrants and urban natives, and the changes of these aspects from 2002 to 2007. We find that prior migration experience is a key factor for the migration decision of rural household members, and its importance keeps increasing from 2002 to 2007. Our results show that there is a significant increase in wages among both migrants and urban natives over this five-year period, but migrants have enjoyed faster wage growth, and most of the increase of wages among migrants can be attributed to the increase of returns to their characteristics. We also find evidence suggesting convergence of urban labor markets for migrants and for urban natives during this five-year period.

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The authors employ spatial econometrics techniques and Annual Averages data from the U.S. Bureau of Labor Statistics for 1990-2004 to examine how changes in the minimum wage affect teen employment. Spatial econometrics techniques account for the fact that employment is correlated across states. Such correlation may exist if a change in the minimum wage in a state affects employment not only in its own state but also in other, neighboring states. The authors show that state minimum wages negatively affect teen employment to a larger degree than is found in studies that do not account for this correlation. Their results show a combined direct and indirect effect of minimum wages on teen employment to be -2.1 per cent for a 10 per cent increase in the real effective minimum wage. Ignoring spatial correlation underestimates the magnitude of the effect of minimum wages on teen employment.

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Using a survey of a cohort of UK graduates, linked to administrative data on higher education participation, this paper investigates the labour market attainment of recent graduates by subject of study. We document a large heterogeneity in the mean wages of graduates from different subjects and a considerably larger one within subject with individuals with the most favourable unobserved characteristics obtaining wages almost twice as large as those with the worst. Moreover, gender differences in wages within subjects are also large. We then simulate a graduate tax to calculate a willingness to pay - in form of tuition fees - to capture these subject wage premia.

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Using an internet collected dataset, we will provide some empirical evidence on the information that Dutch high school students possess before their decision on tertiary education participation. The sample is prone to selective participation and high attrition, but we detect little systematic effects and inconsistent reporting of probability distribution is not more frequent than in controlled settings. We find little support for patterns that one would expect from individuals having private information. Girls expect substantially lower earnings in all schooling scenarios, but implicit rate of returns do not differ from those anticipated by boys. We find no evidence of expected risk compensation.

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Econometric evaluations of public-sponsored training programmes generally find little evidence of an impact of such policies on transition rates out of unemployment. We perform the first evaluation of training effects for the unemployed adults in France, exploiting a unique longitudinal dataset from the unemployment insurance system. Using the so-called timing-of-events methodology to control for both observed and unobserved heterogeneity, we find that training does not accelerate the exit from unemployment, but has a significant and positive effect on the duration of the subsequent employment spell. Accounting for training duration, we find that longer training spells cause longer unemployment spells, but also longer employment spells, suggesting that training improves the matching process between jobseekers and firms.

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Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms' training expenditures. Instead, product market competition does not have an effect on firm-sponsored training. We conclude that increasing competition through international integration and globalization does not pose a threat to investments in on-the-job training. An increase in labor market flexibility may reduce incentives of firms to invest in training, but the magnitude of this effect is small.

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This paper identifies the types of immigrants that Canada has recruited to foster modern Canadian economic development and assesses how effective Canada has been in recruiting and retaining these required immigrants in the 21st century. Evidence from both ‘balance of trade’ and ‘balance of payments’ exercises indicates that it is difficult to determine if there actually exist positive net inflows of managers and professionals during the 1982-2001 period. The entry of these highly skilled immigrants resulted from a series of distinct labour market policies adopted by Citizenship and Immigration Canada and its predecessor agencies. The paper presents evidence to support that between 1976-1990 a ‘tap on-tap off’ policy admitted skilled immigrants to Canada only if a labour vacancy was anticipated. However, after 1990 tests reveal that the previous year’s economic immigrant admissions determined the contemporary immigrant flows with a 10 month lag. Offsetting this robust admission of economic immigrants in the 1990s was the substantial outflows of previous Canadian immigrants as part of the rising phenomenon of ‘brain circulation’. Of particular note is the large number of highly skilled Chinese who have returned to Hong-Kong after 1997. Given this ‘brain circulation’ and the chronic underutilization of its highly trained immigrants I conclude that Canada’s traditional use of immigrants as an ‘engine of growth’ is very limited in the 21st century and suggest recruitment of foreign graduate students to revitalize the role of immigrants in Canadian development.

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