Immigrants' Wage Growth and Selective Out-Migration

Abstract

This paper examines immigrant wage growth taking selective out‐migration into account using administrative data from the Netherlands. Addressing a limitation in the previous literature, we address the potential endogeneity of immigrants’ labour supply and out‐migration decisions on their earning profiles using a correlated competing risk model. We distinguish between labour and family migrants, given their different labour market and out‐migration behaviours. Our findings show that accounting for selective labour supply is as important as accounting for selective out‐migration. Controlling only for out‐migration selectivity would underestimate immigrants’ wage growth, whilst controlling only for labour market selectivity would overestimate their wage growth. This shows that different selections are important for different types of migrants.