Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279376 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10625
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We relate origin-destination real price differences to immigrants' reservation wages and their career trajectories, exploiting administrative data from Germany and the 2004 enlargement of the European Union. We find that immigrants who enter Germany when a unit of earnings from Germany allows for larger consumption at home settle for lower entry wages, but subsequently catch up to those arriving with less favourable exchange rates, through transition to better-paying occupations and firms. Similar patterns hold in the US data. Our analysis offers one explanation for the widespread phenomenon of immigrants' downgrading, with new implications for immigrant cohort effects and assimilation profiles.
Subjects: 
real exchange rate
reservation wage
immigrant downgrading
earnings assimilation
JEL: 
J24
J31
J61
O15
O24
Document Type: 
Working Paper
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