Substantial Labor Market Effects of the Residency Status How Important are Initial Conditions at Arrival for Immigrants?

This study uses information about the legal status upon arrival to study long-term labor market effects of residency status. I find that immigrants who arrived with a job commitment in Germany gain a long-term income advantage of 18.6% compared with other migration groups. The results underline the importance of initial conditions at arrival for the labor market integration of immigrants. In fact, the residency status at arrival affects employment status and labor market income after decades, while selective out-migration and observable selection are taken into account. Further examinations demonstrate that the effects are driven by occupational choice and education. In particular, immigrants with middle or high education and immigrants employed in white-collar or public service jobs benefit from a job commitment at arrival. The income penalty of asylum seekers is found in each education group.