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1 Disussion Paper Series CPD 41/14 Ethnosizing Immigrants: A Theoretial Framework Gil S. Epstein and Odelia Heizler (Cohen) Centre for Researh and Analysis of Migration Department of Eonomis, University College London Drayton House, 30 Gordon Street, London WC1H 0AX

2 Ethnosizing Immigrants: A Theoretial Framework Gil S. Epstein a,b and Odelia Heizler (Cohen) a Department of Eonomis, Bar-Ilan University 52900, Ramat-Gan, Israel b IZA, Bonn and CReAM, London Department of Agriultural Eonomis and Management, The Hebrew University of Jerusalem, Rehovot 76100, Israel, b IZA, Bonn Abstrat Reently, Constant, Gataullina, and Zimmermann (2009) established a new method to measure ethni identity whih they alled the "ethnosizer". Using information on an individual's language, ulture, soial interations, history of migration, and ethni selfidentifiation, the method lassifies that individual into one of four states: assimilation, integration, separation or marginalization. A large body of literature has emerged examining the effets of immigrants' harateristis (age, gender, eduation, religion, et.) on their ethni identity using the ethnosizer. This note presents a basi theoretial framework to shed light on the vast olletion of empirial results obtained on this topi. Keywords: Ethnosizer, Immigrants, Assimilation, Integration, Separation, Marginalization. Corresponding author: Gil. S. Epstein, gil.epstein@biu.a.il, Tel:

3 1. Introdution Immigrants experiene high unemployment and earn less than natives in many ountries. Sine the seminal paper by Chiswik (1978), the eonomis literature has dealt with the immigrant native gap in the labor market. The differenes an be explained by human apital, age, language skills, religious and ethni origin, and time spent in the host ountry, among other harateristis. However, the atual immigrant native gap still remains to be explored. Reent studies have used ethni identifiation, i.e. the degree of the immigrant's identifiation with the ulture and soiety of the host ountry and the ountry of origin, to explain immigrant outomes in the labor market. Ethni identity an hange after arrival, as opposed to ethniity whih remains a permanent harateristi of the soure ountry. Over the last years, eonomists have begun to explore ultural and ethni segregation using psyhology and soiology of identity theories. For example, in seminal work, Akerlof and Kranton (2000), onsiders how identity, a person's sense of self, affets eonomi outomes. Constant, Gataullina, and Zimmermann (2009) developed the ethnosizer, a new measure of the intensity of the individual's ethni identity with respet to his or her host ountry's and soure ountry's soiety. This measurement uses information on language, ulture, soial interations, history of migration, and ethni selfidentifiation. The ethnosizer lassifies immigrants into one of four states of ethni identifiation: integration, assimilation, separation or marginalization, based on the German Soioeonomi Panel (GSOEP) for In addition, they demonstrated harateristis that affet the immigrant's state of ethni identifiation. As we will present below, there is a rapidly growing literature on the effet of ethni identifiation on eonomi behavior suh as partiipation in the labor market, inome and household ownership using the ethnosizer (see for survey, Constant and Zimmermann, 2008, 2013). This note ontributes to the rising literature on ethni identifiation by offering a simple theoretial model to provide possible explanations for the different empirial results obtained in the literature. We adopt the twodimensional version of the ethnosizer to explain whih immigrants are assimilated, integrated, segregated or marginalized. 2

4 2. Bakground and literature review The method to measure ethni identity, the ethnosizer, an range from zero (full ommitment to the host ountry) to one (full ommitment to the ountry of origin). There are two versions of ethnosizer: the one dimensional and the two-dimensional. In the former, a stronger ommitment to the host ountry neessarily implies a weaker onnetion to the ountry of origin and vie versa. However, when onsidering the seond version, the ethnosizer measurement allows simultaneous intensifiation of onnetions to the host and soure ountries. Similar to Berry (1980), the twodimensional version of the ethnosizer lassifies immigrants into one of four states: integration, assimilation, separation or marginalization (see Figure 1). Assimilation (A) is a strong identifiation with the host ulture and soiety, oupled with a firm onformity to its norms, values, and odes of ondut, and a weak identifiation with anestry; integration (I) is ahieved when an individual ombines, inorporates, and exhibits both strong dediation to the ountry of origin and ommitment and onformity to the host soiety; marginalization (M) is weak dediation to or strong detahment from either the dominant ulture or the ulture of origin, and separation (S) is an exlusive ommitment to the ulture of origin, even years after emigration, paired with weak involvement in the host ulture and ountry realities. Figure Soure: Constant et al. (2009) 3

5 In their pioneering artile, Constant et al. (2009) demonstrated harateristis that affet the immigrant's state of ethni identifiation, i.e., integration, assimilation, separation and marginalization, using data from the GSOEP. They found that young migrants are integrated or assimilated upon arrival, with women being less assimilated than men. Immigrants with a ollege degree or higher eduation from their home ountry separated less than those with no eduation. Shool eduation, whether omplete or inomplete, was more harmful to the proess of integration or assimilation than no eduation in the home ountry; it also led to more separation. Ex-Yugoslavs assimilated more and separated less than Turks in Germany, but they also marginalized more. Whereas Greeks, Spaniards and Italians were no different than Turks, people from other ethniities integrated and assimilated more. Constant, Gataullina, Zimmermann and Zimmermann (2006) showed that Christians adapt more easily to German soiety than Muslims. Female Muslims integrated and assimilated less, and separated more, than Muslim men. Christian immigrants with a ollege or higher eduation from their home ountry integrated well, whereas Muslims did not. Zimmermann (2007) showed that the results of the ethnosizer largely depend on premigration harateristis and that this measurement is exogenous to the eonomi and soial proesses experiened in the host ountry. The ethni identifiation depends, not only in the immigrants' harateristis, but also on the harateristis of the immigrant's resident. For example, Constant, Shüller and Zimmermann (2013) found that residential ethni lustering strengthens immigrants identifiation with the origin and weakens identifiation with the host soiety. Information for a large range of ountries is aumulating in the literature on the effet of ethni identifiation on eonomi behavior suh as partiipation in the labor market, inome and household ownership using the ethnosizer. With respet to the deision to work, Constant and Zimmermann (2009), using data from Germany, showed that immigrants (both men and women) who are separated and marginalized are less likely to work than those who are assimilated. In addition, women who were integrated tended to work more than those who were assimilated, but there was no signifiant differene between integrated men and assimilated women. Constant, Kahane, Rinne, and Zimmermann (2011) found that separated migrants (i.e., those not attahed to the host ountry but rather strongly attahed to their ountry of origin) have a relatively slow reintegration into the labor market. Constant, Gataullina, and Zimmermann (2006) examined gender differenes in the effet of ethni identifiation 4

6 on the probability of working. They found that for immigrant men, preserving their attahment to the ountry of origin does not affet their probability of working, as long as they have a strong attahment to the host ulture and soiety. For immigrant women, however, maintaining their ommitment to their ountry of origin along with a strong adjustment to the host soiety had a very strong and positive effet on their probability of working. With respet to the effet of ethni identifiation on inome, Zimmermann (2007) showed that if male and female migrants are fully integrated, their earnings grow dramatially, but the inrease in the females' earnings is higher. Full separation and full marginalization led to a derease in labor earnings for both male and female migrants. Constant and Zimmermann (2009) did not find any signifiant effets of ethni identity on immigrant workers' earnings (while ontrolling for seletion in the labor market). On the other hand, Danzer and Ulku (2011), using data on Turks in Berlin, found that a high degree of integration (whih was a ombination of politial, soial and eonomi integration) positively and signifiantly affets the immigrants' inome. Constant, Krause, Rinne and Zimmermann (2010) analyzed the reservation wages of the first and seond generations of migrants to Germany. They found that the reservation wages inrease from first to seond-generation migrants, but the ethni identifiation and the ethnosizer does not explain muh of this reservation wage gap. Similar to the ethnosizer, Drydakis (2012), using data from Greee, suggested ethni identifiation to be a ombination of language, ultural habits (food, media, musi and reading), self-identifiation, soial interation, and future itizenship plans. He found that assimilation and integration dramatially inrease the immigrant's wage, whereas separation and marginalization derease it. Gorinas (2014), using a Danish survey, extended the ethnosizer by developing the modernization index to measure openness to majority norms. He showed that immigrants, partiularly first-generation immigrant women, who share soial norms with the majority experiene signifiantly better employment outomes, but that immigrant employment is almost unaffeted by ethni identity. Another field is household ownership: Constant, Roberts, and Zimmermann (2009) found that assimilated or integrated households are more likely to own a house than those that are separated or marginalized for a given set of soioeonomi and demographi harateristis. 5

7 4. The model Consider an immigrant who settles in a new ountry. To find a job, he or she needs assistane in his/her job searh. A large number of studies have shown that soial networks, i.e. friends and family, play a major role in job searhes. The empirial evidene reveals that also in the advaned eonomies suh as the U.S., the informal searh methods are a key determinant of labor prospets (for a survey, see Ioannides and Loury, 2004). Moreover, Kahane and Mendola (2007) examined the effet of soial networks on labor market status, and show that the role of the soial networks may be espeially pronouned for immigrant minority group. Thus, it is assumed that the immigrant an find a job using two different means: by investing effort in reating networks with migrants that arrived before he or she did,, and by investing effort in reating networks with the natives, e. The strength of the immigrant's soial networks is a funtion of both the immigrant's personal ontats and his or her identifiation with the ulture, norms and values of the group. The level of the group's ommitment to the individual inreases with the individual's similarity to that group's members. Thus, the level of effiieny of the immigrant's investments, and e, depends on the extent of the relationship between the immigrant and the members of the group. This relationship is affeted by the migrant's language aquisition, and adaption to the ulture and values of the group, among others. Therefore, the immigrant's investments, and e, represent his or her ethni identifiation with the soure soiety and the new soiety, respetively. It is assumed for simpliity that the immigrant's leisure time, T, is fixed. The immigrant therefore alloates part (or all) of his/her leisure time to reating soial networks with immigrants as well as natives. The time required to reate soial networks with immigrants an differ from that required to reate soial networks with natives. Let 0 denote this differene. Clearly, reating soial networks with migrants requires less investment than reating them with the loal population ( <1). The probability of finding a job,, depends on the immigrant's level of soial p e, p e, 2 p e, 2 p e, networking and satisfies: 0, 0, 0, e e p 6

8 Let w denote the potential wage that the immigrants an reeive in the host ountry. This wage depends on pre-immigration harateristis suh as gender, eduation, religion, eonomi status, et. We normalize the ost of investing in the migrants' self-network to unity and the ost of investing in the natives' network by 1. depends on the ultural distane between the host ountry's and soure ountry's soieties. Denote this distane by d. also depends on the immigrant's different harateristis, suh as age and gender. We denote these harateristis by. The expeted utility of the immigrant is given by: a,, E u p e w d a e (1.1) s.t. e T (1.2) Below, we assume that the time onstraint is not bounding, i.e. e T. We develop the results for a bounding time onstraint in the appendix, and show that the main results do not hange. The optimal investment in the migrants' network, in the natives' network, * e, satisfy: *, and the optimal investment E u e E u p e, w d, a 0 e p e, w 1 0 (1.3) From (1.3), in equilibrium, it must hold that: 7

9 p e, e w p e, 1 w (1.4) We assume that the migrants have a relatively smaller population than the loal population, and there is therefore a higher return for being part of the natives' network than for being part of the migrants' network. In addition, the type and the quality of the jobs provided by immigrant networks is different than the jobs provided by the native networks (see Kahane and Mendola, 2007). Let investing in the migrant network vs. the native network. Thus: 1 denote the effiieny of, p e, p e e e e (1.5) Moreover, as the stok of immigrants in the host ountry, N, inreases, the effetiveness (effiieny) of investing in the migrants' network inreases: 0. N Figure 2 demonstrates the optimal investment in the migrants' network, in the natives' network, * e, and, as desribed in (1.4). It is not lear where the investment will be higher, i.e., with the native or migrant populations * 8

10 Figure 2. p e, p e, e Investment in network Whether the investment in the migrant network is higher or lower than in the 1 native network depends on the relation between and, and the relationship w w p e, p e, between and. Thus, whether an immigrant will invest more in one e network than the other depends on the relative ost and benefit from these investments suh that: if 1 than e if 1 than e if 1 th an e * * * * * * 9

11 2.1. Comparative Statis Let us try to understand the impliations of the above results. As noted, the relative ost,, is affeted by the ultural distane, d, and personal harateristis, a. The first omponent, ultural distane, is reated by different languages, ethniities, religions and soial norms (see Ghemawat, 2001). Clearly, as the ultural distane between the soure soiety and host soiety inreases, the immigrant's need to invest more effort to integrate into the host soiety, thus the relative ost,, inreases. The seond omponent, personal harateristis, inludes the immigrant's age at entry and his or her ability to reate soial networks. As the immigrant's age inreases, his or her ability to aquire the new language and the new soial norms dereases, and thus the relative ost,, inreases (see, for example, Chiswih and Miller, 2005). Figure 3. p e, e p e, * e1 Investment in network Now suppose that the ultural distane between the host soiety and the soure soiety, d, inreases, or alternatively, that the immigrant's age at arrival inreases, suh that the relative ost of investment in the native ompared to migrant network, 11

12 1 0, inreases. Looking at Figure 3, inreases to level, and thus the immigrant's w w * * optimal investment in the native network dereases from to, whereas his or her optimal investment in the migrant network does not hange. In other words, ultural distane between the host ountry and the home ountry or older age at arrival auses * * marginalization (if is low) or separation (if is high). We an use this outome to 0 explain the results obtained by Constant et al. (2009) that as the age at arrival inreases, separation and marginalization inrease, while integration and assimilation derease. It also explains the results of Constant, Gataullina, Zimmermann, and Zimmermann (2006) showing that Muslims, who have a strong ultural distane from the loal population, are less integrated and more separate than the Christians. Moreover, it explains why Constant et al. (2009) found that ex-yugoslavs, who had a small ultural distane from the loal population, assimilated better than Turks, Greeks, Italians or Spaniards. As mentioned above, the potential wage that immigrants an reeive in their host ountry depends on pre-immigration harateristis suh as gender, level of eduation, experiene, et. Suppose two individuals, who differ in their gender or eduation: the first an earn, whereas the seond an earn ( w w ). Figure 4 shows that the individual with the low wage invests less in soial networks migrants' as well as natives'. This explains the result presented by Constant et al. (2009) on the effet of eduation and experiene upon entry into the host ountry on the immigrant's ethni identifiation: a high potential wage at entry (with derives from ollege and higher eduation or voational training in the soure ountry) dereases separation and marginalization. Females, who an be disriminated against in the labor market, assimilate less than males. 0 w0 w1 0 1 e 0 e 1 11

13 Figure 4. p e, p e, Investment in network e Finally, suppose that the effiieny level of the relative investment in the immigrant's network, N, inreases. This an happen, for example, when the stok of migrants in the host ountry inreases, thus enabling immigrants to obtain more information on the job market. It also an happen when the politial strength of the minority group inreases. It is easy to see from Figure 5 that the immigrant will inrease * * his/her investment in the migrant network from to, whereas the investment in the native network will not hange. It is thus expeted that when the stok of immigrants in the host ountry inreases, separation or integration will be obtained. This is onsistent with the findings of Constant et al. (2009) and Constant, Gataullina, Zimmermann and Zimmermann (2006) of differenes in the ethni identity of different groups that an be followed by the size and politial strength of the groups in the host ountry

14 Figure 5. p e, e p e, Investment in network 5. Disussion In this note, the effets of gender, soure ountry, religion, age at arrival, eduation level and experiene in the soure ountry on the immigrant's ethni identifiation in the host ountry are explained. Speifially, we provide some theoretial explanations for the different empirial results presented in the literature on ethni identifiation (Constant and Zimmermann, 2013; Constant et al., 2009; Constant, Gataullina Zimmermann, and Zimmermann, 2006). We illustrate the results in the two-dimensional model of the ethnosizer, whih allows simultaneous ommitment to the host and soure ountry soieties. The total time invested in soial networks of the host ountry and ountry of origin is optimally hosen. While Constant et al. (2009) and Constant, Gataullina Zimmermann, and Zimmermann (2006) do not examine hanges in ethni identifiation over time, i.e. two idential migrants arriving at two different periods are lassified with the same status, our theoretial model shows that the ethni identifiation of a migrant will inrease over time. 13

15 Referenes Akerlof, G.A., Kranton, R.E. (2000)" Eonomis and Identity", Quarterly Journal of Eonomis, 115(3), B enabou, R. and Tirole, J. (2013) "Identity, Morals and Taboos: Beliefs as Assets", The Quarterly Journal of Eonomis, 126, Berry, J. (1980) "Aulturation as Varieties of Adaptation." In: Padilla, A.M. (Ed.). Aulturation: Theory, Models and Some New Findings. Boulder, CO: Westview, Chiswik, B.R. (1978) "The Effet of Amerianization on the Earnings of Foreign-Born Men", Journal of Politial Eonomis, 86, Chiswik, B.R. and Miller, P.M. (2005) "Do Enlaves Matter in Immigrant Adjustment?", City and Community, 4(1), Constant, A., Gataullina, L. and Zimmermann, K.F. (2006) Gender, Ethni Identity and Work, IZA Disussion Paper No Constant, A., Gataullina, L. and Zimmermann, K.F. (2009) "Ethnosizing Immigrants", Journal of Eonomi Behavior & Organization, 69(3), Constant, A., Gataullina, L., Zimmermann, L. and Zimmermann, K.F. (2006) "Clash of Cultures: Muslims and Christians in the Ethnosizing Proess", IZA Disussion Paper No Constant, A., Kahane, M., Rinne, U. and Zimmermann, K.F. (2011) "Ethniity, Job Searh and Labor Market Reintegration of the Unemployed", International Journal of Manpower, 32, Constant, A., Shüller, S. and Zimmermann, K.F. (2013): "Ethni Spatial Dispersion and Immigrant Identity", IZA DP No. 7868, IZA, Bonn. Constant, A., Krause, A. Rinne, U. and Zimmermann, K.F. (2010): "Reservation Wages of First and Seond Generation Migrants",", IZA DP No. 5396, IZA, Bonn. Constant, A., Roberts, R. and Zimmermann, K.F. (2009) "Ethni Identity and Immigrant Homeownership", Urban Studies, 46(9), Constant, A. and Zimmermann, K.F. (2008) "Measuring Ethni Identity and Its Impat on Eonomi Behavior", Journal of the European Eonomi Assoiation, 6(2 3), Constant, A. and Zimmermann, K.F. (2009) "Work and Money: Payoffs by Ethni Identity and Gender", Researh in Labor Eonomis, 29,

16 Constant, A. and Zimmermann, K.F. (2013) "Immigrants, Ethni Identities and the Nation-State." In: Constant, A. and Zimmermann, K.F. (Eds.). International Handbook on the Eonomis of Migration. Edward Elgar, ISBN Danzer, A.M and Ulku, H. (2011) "Integration, Soial Networks and Eonomi Suess of Immigrants: A Case Study of the Turkish Community in Berlin", Kyklos, 64, Drydakis, N. (2012) "Ethni Identity and Immigrants Wages in Greee", International Journal of Interultural Relations, 36, Ghemawat, P. (2001) "Distane Still Matters: The Hard Reality of Global Expansion", Harvard Business Review, 79(8), Gorinas, C. (2014) "Ethni Identity, Majority Norms, and the Native Immigrant Employment Gap", Journal of Population Eonomis, 27, Ioannides, Y. M. and L. D. Loury (2004), "Job Information Networks, Neighborhood Effets, and Inequality," Journal of Eonomi Literature, 42(4): Kahane, M. and Mendola, M. (2007) "Soial Determinants of Labor Market Status of Ethni Minorities in Britain", Researh in Labor Eonomis, 29, Zimmermann, K.F. (2007) "Migrant Ethni Identity: Conept and Poliy Impliations." The Cyprus Eonomi Soiety Annual Leture in Eonomis. IZA Disussion Paper No

17 Appendix The ase of a bounding time onstraint, i.e., e T * The optimal investment in the native network, e, satisfies: du u u p p w w 0 de e e e (1.6) From(1.6), it follows that: p p e w w (1.7) p 1 Using the optimal investment of immigrants in the loal population,, we get: w p e w (1.8) It is lear that the optimal investment in the native network with the effetive time onstraint (as presented in (1.8)) is equal to that without this time onstraint (as presented in (1.4)). 16