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Real Exchange Rates and the Earnings of Immigrants

Dustmann, Christian; Ku, Hyejin; Surovtseva, Tanya; (2023) Real Exchange Rates and the Earnings of Immigrants. The Economic Journal , Article uead066. 10.1093/ej/uead066. (In press). Green open access

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Abstract

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.

Type: Article
Title: Real Exchange Rates and the Earnings of Immigrants
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/ej/uead066
Publisher version: https://doi.org/10.1093/ej/uead066
Language: English
Additional information: © The Author(s) 2023. Published by Oxford University Press on behalf of Royal Economic Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com
Keywords: Real exchange rate, reservation wage, immigrant downgrading, earnings assimilation
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10158973
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