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Hardcover | $40.00 Short | £27.95 | ISBN: 9780262017671 | 322 pp. | 6 x 9 in | 56 figures, 80 tables| September 2012
 
ebook | $28.00 Short | ISBN: 9780262306133 | 322 pp. | 6 x 9 in | 56 figures, 80 tables| September 2012
 

Immigration and Labor Market Mobility in Israel, 1990 to 2009

Overview

After the collapse of the Soviet Union in 1989, Soviet Jews emigrated in large numbers to Israel. Over the next ten years, Israel absorbed approximately 900,000 immigrants from the former Soviet Union, an influx that equaled about twenty percent of the Israeli population. Most of these new immigrants of working age were college-educated and highly skilled. Once in Israel, they were eligible for a generous package of benefits, including housing subsidies, Hebrew language training, and vocational education. This episode provides a natural experiment for testing the consequences of a large immigration inflow of skilled workers. This book provides a detailed analysis of the gradual process of occupational upgrading of immigrants and the associated rise in their wages.

Based on their analysis, the authors conclude that even a very large and unanticipated wave of immigration can be integrated within the local labor market without any significant long-term adverse economic effect on natives. The small effect on wages and employment of natives is explained by the capital inflows into Israel and the gradual entry of immigrants into high-skill jobs as they invest in local human capital. An important contribution of the book to the immigration literature is the formulation and estimation of stochastic dynamic models that combine job search with investment in human capital and the analysis of alternative government policies within this framework.

About the Authors

Sarit Cohen Goldner is Lecturer in the Department of Economics at Bar-Ilan University.

Zvi Eckstein is Dean of the School of Economics in the Interdisciplinary Center Herzliya and served as Deputy Governor of the Bank of Israel from 2006 to 2011.

Yoram Weiss is Professor of Economics at Tel-Aviv University.

Table of Contents

  • Immigration and Labor Market Mobility in Israel, 1990 to 2009
  • Immigration and Labor Market Mobility in Israel, 1990 to 2009
  • Sarit Cohen Goldner, Zvi Eckstein, and Yoram Weiss
  • The MIT Press
  • Cambridge, Massachusetts
  • London, England
  • ©
  • 2012
  • Massachusetts Institute of Technology
  • All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.
  • MIT Press books may be purchased at special quantity discounts for business or sales promotional use. For information, please email special_sales@mitpress.mit.edu or write to Special Sales Department, The MIT Press, 55 Hayward Street, Cambridge, MA 02142.
  • Related material for this book, including tables, figures, data, and programs, can be found at http://www.tau.ac.il/~eckstein/immigrants.html.
  • This book was set in Times Roman by Toppan Best-set Premedia Limited. Printed and bound in the United States of America.
  • Library of Congress Cataloging-in-Publication Data
  • Cohen Goldner, Sarit.
  • Immigration and labor market mobility in Israel, 1990 to 2009 / Sarit Cohen Goldner, Zvi Eckstein, and Yoram Weiss.
  •  p. cm.
  • Includes bibliographical references and index.
  • ISBN 978-0-262-01767-1 (hardcover : alk. paper)
  • 1. Labor market—Israel. 2. Foreign workers, Russian—Israel. 3. Israel—Emigration and immigration—Economic conditions. 4. Immigrants—Israel—Economic conditions. I. Eckstein, Zvi. II. Weiss, Yoram. III. Title.
  • HD5812.2.A6C64 2012
  • 331.12′909569409049—dc23
  • 2011048965
  • 10 9 8 7 6 5 4 3 2 1
  • Contents
  • List of Tables
  •  ix
  • List of Figures
  •  xiii
  • Acknowledgments
  •  xv
  • 1 Introduction 1
  • 1.1 Introduction 1
  • 1.2 Background 2
  • 1.3 Description of the Chapters 3
  • 1.4 Lessons 11
  • 2 The Aggregate Macroeconomic Impact of a Large Inflow of Immigrants 15
  • 2.1 Introduction 15
  • 2.2 Natives and Immigrants in the Labor Market 19
  • 2.3 The Capital–Labor Ratio—Trends and Adjustment 26
  • 2.4 An Open-Economy Equilibrium Model with Adjustment Costs 27
  • 2.4.1 Model Specification
  •  31
  • 2.4.2 Calibration
  •  32
  • 2.4.3 Simulations
  •  33
  • 2.4.4 Related Literature
  •  35
  • 2.5 Immigration and GNP Growth: A Puzzle?
  •  35
  • 2.6 Summary
  •  36
  • Appendix: Quality-Adjusted Labor
  •  37
  • 3 On the Wage Growth of Immigrants
  •  41
  • 3.1 Introduction
  •  41
  • 3.2 A Model for Immigrant Earning Equations 46
  • 3.3 The Empirical Earning Function
  •  50
  • 3.4 Data
  •  54
  • 3.5 Estimation Results
  •  56
  • 3.5.1 Results for Natives
  •  56
  • 3.5.2 Results for Immigrants 
  • 57
  • 3.6 Decomposition of Wage Growth 59
  • 3.7 Occupational Transitions
  •  62
  • 3.8 Convergence of Wages
  •  63
  • 3.8.1 Convergence of Residual Distributions
  •  64
  • 3.8.2 Convergence of Average Wages
  •  65
  • 3.9 Summary
  •  69
  • 4 Immigrants’ Choice of Employment, Occupation, and Human Capital: Dynamic Stochastic Empirical Models
  •  73
  • 4.1 Introduction
  •  73
  • 4.2 The Data
  •  76
  • 4.2.1 (A) Females
  •  78
  • 4.2.2 (B) Males
  •  84
  • 4.3 Model Specifications
  •  89
  • 4.3.1 (A) Females
  •  89
  • 4.3.2 (B) Males
  •  93
  • 4.4 Solution and Estimation Methods
  •  97
  • 4.4.1 Solution
  •  98
  • 4.4.2 Estimation Method
  •  100
  • 4.4.3 Identification
  •  101
  • 4.5 Results
  •  102
  • 4.5.1 The Model’s Fit
  •  103
  • 4.5.2 Estimated Parameters
  •  112
  • 4.6 Policy Analysis: Training
  •  131
  • 4.6.1 (A) Females
  •  133
  • 4.6.2 (B) Males
  •  142
  • 4.6.3 Summary
  •  147
  • 4.7 Verification of the Model: Out-of-Sample Predictions
  •  150
  • 4.7.1 Out-of-Sample Predictions
  •  152
  • 4.7.2 Aggregate Trends
  •  153
  • 4.7.3 High-Skilled Immigrants
  •  155
  • 4.7.4 Summary 155
  • 4.8 The Value of Immigrating to Israel
  •  157
  • 4.9 Concluding Remarks
  •  160
  • 5 Job Search and Loss of Skills
  •  163
  • 5.1 Introduction
  •  163
  • 5.2 Data
  •  165
  • 5.3 The Model
  •  168
  • 5.4 Implementation of the Model
  •  172
  • 5.5 Results
  •  176
  • 5.5.1 Wages
  •  176
  • 5.5.2 Nonmonetary Returns
  •  177
  • 5.2.3 Job-Offer and Job-Termination Probabilities
  •  177
  • 5.2.4 Choice Probabilities and Types
  •  179
  • 5.6 The Model’s Fit
  •  182
  • 5.7 Loss of Human Capital
  •  188
  • 5.8 Summary 
  • 195
  • Appendix: Supplementary Tables 198
  • 6 The Joint Choice of Residential Location and Employment by Immigrants
  •  205
  • 6.1 Introduction
  •  205
  • 6.2 The Theoretical Model
  •  207
  • 6.2.1 The Housing Market
  •  207
  • 6.2.2 Production Technology
  •  207
  • 6.2.3 The Labor Market
  •  208
  • 6.2.4 Wages
  •  208
  • 6.2.5 Job-Offer Probabilities
  •  209
  • 6.2.6 Job Search
  •  209
  • 6.2.7 Utility
  •  209
  • 6.2.8 The Immigrant’s Problem
  •  210
  • 6.2.9 The Model’s Predictions
  •  210
  • 6.3 Model Specification
  •  211
  • 6.3.1 The Value Function
  •  211
  • 6.3.2 The Wage Function
  •  212
  • 6.3.3 Areas of Residence, Occupations, and Job Search
  •  213
  • 6.3.4 Job-Offer Probabilities
  •  214
  • 6.3.5 The Immigrant’s Choice on Arrival in Israel
  •  215
  • 6.4 Estimation and Identification
  •  217
  • 6.5 Data
  •  219
  • 6.6 Results
  •  222
  • 6.6.1 Wage Parameters
  •  222
  • 6.6.2 Job-Offer Probability Parameters
  •  223
  • 6.6.3 Weight of the Monetary Component in Immigrants’ Choices
  •  226
  • 6.6.4 The Probability of Search on Each Path
  •  226
  • 6.6.5 Nonemployment
  •  227
  • 6.6.6 Distribution of Immigrants by Area of Residence and Occupation
  •  229
  • 6.6.7 The Probability of Moving between Areas of Residence and Occupations
  •  229
  • 6.6.8 Utilization of the Immigrants’ Human Capital in Israel
  •  234
  • 6.7 Comparison of the Model’s Prediction to Other Data Sources
  •  237
  • 6.8 Conclusions
  •  238
  • Appendix A: Supplementary Model for Estimating the Wage Premium and Rate of Promotion
  •  240
  • Appendix B: Supplementary Tables
  •  241
  • 7 Immigrants from the FSU after Twenty Years in Israel: Evidence and Interpretation
  •  245
  • 7.1 Introduction
  •  245
  • 7.2 Employment, Occupations, and Wages
  •  246
  • 7.3 Social Indicators
  •  260
  • 7.3.1 Housing
  •  260
  • 7.3.2 Marriage Patterns
  •  263
  • 7.4 Return Migration and Out-Migration
  •  267
  • 7.5 Concluding Remarks
  •  269
  • Notes
  •  273
  • References
  •  293
  • Index
  •  299
  • Related material for this book, including tables, figures, data, and programs, can be found at http://www.tau.ac.il/~eckstein/immigrants.html.

Endorsements

“This book brings together years of careful and insightful scholarship on one of the largest migration episodes for which good data are available: the migration of Jews from the ex-Soviet Union to Israel. I recommend it to anyone interested in the economic assimilation or impact of immigrants.”
--Jennifer Hunt, Department of Economics, Rutgers University"—

“This book provides a comprehensive and rigorous analysis, conducted over a fifteen year period, of the unanticipated large influx of Russian immigrants to Israel that occurred after the collapse of the Soviet Union. The authors consider both how these immigrants were assimilated into the labor market and the economy-wide adjustments that ensued. The book is a major contribution that is a must-read for both researchers and policy makers.”
--Kenneth Wolpin, Walter H. and Leonore C. Annenberg Professor in the Social Sciences, University of Pennsylvania"—

Immigration and Labor Market Mobility in Israel, 1990-2009 constitutes a major contribution to our understanding of the adjustment and impact of immigrants on the destination country. One advantage of this study of Israel is the unique experience of a large (relative to the host economy) exogenous immigration. Another is that it is not on an English-speaking developed economy of overseas settlement, which are the source of so much of the immigration literature. As a result, this book helps put into perspective the research findings on immigration among the English-speaking developed countries.”
--Barry Chiswick, Chair of the Economics Department, George Washington University"—

"Immigration and Labor Market Mobility in Israel, 1990 to 2009 is a splendid book on an important topic. Following the collapse of the Soviet Union immigrants from its member countries poured into Israel, increasing its population by 20 percent. The book studies their absorption in the Israeli economy and their impact on local workers, using detailed data sets that have been assembled for this purpose. The topic is fascinating and the analysis exemplary both in depth and breadth."
--Elhanan Helpman, Galen L. Stone Professor of International Trade, Harvard University"—