Zvi Eckstein, Principal Investigator

Labor Mobility of Immigrants: Training, Experience, and Opportunities

The transition pattern of immigrants to a new labor market is characterized by high wage growth, a fast decrease in unemployment as immigrants find initial blue-collar jobs, and then a gradual movement to white-collar occupations. A central aspect of this process is the acquisition of local human capital in the form of the local language, on-the-job learning (experience), and participation in training programs provided by the government. This project focuses on the labor mobility and human capital accumulation of male immigrants who moved from the former Soviet Union to Israel and are characterized by their high levels of skills and education. The researchers have developed a dynamic choice model for employment and training in blue- and white-collar occupations, where the labor market opportunities are random and are affected by the immigrant’s characteristics, his past choices, and his language knowledge.

The model fits the observed patterns of unemployment, employment by occupation, and training. The estimated rates of return to training are very high (13–19%) for most of the male immigrants. However, the estimated disutility from training and the 2% rate of return per quarter for local experience deter the immigrants from participation in training. The wage return to language knowledge is large, but imported skills have zero return in the new country. The researchers found that the effect of training on job offer probabilities has a larger impact on the immigrant’s welfare than the wage return.