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Does host-country education mitigate immigrant inefficiency? Evidence from earnings of Australian university graduates

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  • Dipanwita Sarkar

    (Queensland University of Technology)

  • Trevor C. Collier

    (University of Dayton)

Abstract

Imperfect transferability of skills remains a dominant argument in explaining lower earnings of immigrants. Acquisition of host-country education plays a critical role in overcoming this disadvantage. Using a stochastic frontier approach to compare earnings of native and foreign-born graduates from Australian universities, the authors evaluate the importance of host-country education in reducing earnings inefficiency of immigrants. Although immigrants are found to be initially more inefficient than natives, they assimilate toward the earnings frontier over time. Substantial variation in inefficiency and assimilation patterns exists across immigrants with differing residency status and ethnicity. Non-English background increases inefficiency for immigrants, but more so for permanent residents. Consistent with the tightening of selection criteria in Australia, recent immigrant cohorts are found to be more efficient.

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  • Dipanwita Sarkar & Trevor C. Collier, 2019. "Does host-country education mitigate immigrant inefficiency? Evidence from earnings of Australian university graduates," Empirical Economics, Springer, vol. 56(1), pages 81-106, January.
    • Handle: RePEc:spr:empeco:v:56:y:2019:i:1:d:10.1007_s00181-017-1363-x
    DOI: 10.1007/s00181-017-1363-x
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    Cited by:

    1. Sholeh A. Maani & Le Wen, 2021. "Over-education and immigrant earnings: a penalized quantile panel regression analysis," Applied Economics, Taylor & Francis Journals, vol. 53(24), pages 2771-2790, May.

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    More about this item

    Keywords

    Immigrants; Assimilation; Higher education; Stochastic frontier;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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