## ECO 4116 – Labour Economics

1

ECO 4116 – Labour Economics

Assignment 2

An Econometric Study of the Earnings of a Group of Immigrants in a Canadian Province using Microdata from the 2011 National Household Survey

Gilles Grenier, Fall 2015

Directions

This assignment is due on December 7, 2015. If you want, you can show me in advance an interim report of your programming and preliminary econometric results.

This assignment is a continuation of the first one and you must use the same group of immigrants and the same province that have already been assigned to you. You must estimate, with the 2011 National Household Survey microdata, earnings regressions showing entry effects and assimilation effects. We use a modified version of the model seen in class that takes into account the fact that we consider two groups of immigrants. Because there is only one cross-section, there are no cohort effects. The model is the following:

ln y = X ß + a IO+ ? IG + d (YSM × I) + u

where

ln y = natural logarithm of annual earnings (labour income);

X = vector of personal characteristics (age, age squared, schooling, location of studies, marital status, weeks worked, indicator for full time or part time work);

ß = vector of regression coefficients;

a = regression coefficient indicating the entry effect for other (than your group) immigrants;

IO = dummy variable taking the value 1 for other immigrants and the value 0 otherwise;

? = regression coefficient indicating the entry effect for your group of immigrant;

IG = dummy variable taking the value 1 for your group of immigrants and the value 0 otherwise;

d = regression coefficient indicating the assimilation effect for immigrants (in this specification, assumed to be the same for your group and for other immigrants);

YSM = number of years since migration of the immigrants;

I = 1 for all immigrants, =0 for non-immigrants;

u = regression error term.

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Your data must include the Canadian born people, the immigrants of your group and the other immigrants in the province that has been assigned to you. Your analysis must be done with people aged 20 to 64, with positive wages and separately for men and women.

The assignment will take the form of an essay with a title, an introduction, a development of the subject (including regression tables), a brief conclusion and bibliographical references. The entire paper should have between 1500 and 2000 words, excluding the tables and the bibliographical references. You will be noted in particular on your ability to write your ideas clearly. More precisely, your essay will have the following structure (which is a standard structure for this kind of empirical study):

1. Introduction. The introduction motivates the topic, it says why it is interesting. It introduces the particular group of immigrants to be analysed. It also puts the study in its context by referring to previous studies that are related to yours. The last paragraph of the introduction indicates what is going to be done in each of the following sections. The introduction must be short.

2. Methodology and data. In this section, you present and motivate the regression model to be used, i.e., the one described in the equation above. You also describe the data source, the chosen sample and the variables. The information should be clear enough to allow a person who reads the paper to replicate your work.

3. Analysis of the results. This is the most important and probably the longest section of your paper. You have to present and discuss at least two tables: (1) a table with descriptive statistics; (2) one table with regression results. You must provide an analysis of your results. In particular, for the regression, you must discuss the entry and assimilation effects. From those effects, you can calculate the number of years to reach equality. You must also interpret briefly the coefficients of other key variables. You are also encouraged, as an option, to present a model which is specified slightly differently from the one presented above (some suggestions will be made in class).

4. Conclusion. The conclusion, which is relatively short, summarises the major findings. It can also discuss the policy implications of the results and make suggestions for further research on the same topic.

References. A list of all the bibliographical references that are cited in the text, presented according to the standard criteria.

An example of a computer program will be given in class to help you do the assignment. In your paper, you must edit the stata output to present it in a format that is suitable for a table in a research paper (as will be explained in class).

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