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Differences in Socioeconomic Status Across Ethnic Groups in the Netherlands

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Differences in Socioeconomic Status Across Ethnic Groups in the Netherlands Master Thesis Reprint Prohibited Differences in socioeconomic status across ethnic groups in The Netherlands A theoretical and empirical comparative analysis beyond the discrimination of ethnic groups Ommen, R. van a a Erasmus School of Economics, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, the Netherlands Author: Rémon van Ommen ([email protected]) Supervisor: Prof. Dr. J. de Koning Second reader: Dr. B. Hoogendoorn Rotterdam, 13-10-2011 Keywords: ● Immigration ● SES ● Human Capital ● IHCI-model ● Assimilation ● Over-education Abstract The overall steady net-immigration in the Netherlands started in the beginning of the 1960s onwards. This surplus was created due to a flow of large numbers of so called “guest- workers”, mainly from Turkey and Morocco as well because of the inheritance of immigrants owing to the colonial past from Suriname and the Netherlands Antilles. The socioeconomic status (SES) of these immigrants in the Netherlands is emblematic, in 2010 more than 12.5 percent of the immigrant population is unemployed compared to the 4.5 percent among Dutch indigenous. This thesis examines the differences in SES across immigrants beyond discrimination. Whereas SES has been treated as a multidimensional concept that consists of four dimensions, that is, education, occupational status, income and over-education. Using large-scale cross- sectional datasets, it appears that human capital plays a dominant role in immigrants’ SES, in particular destination-specific human capital (i.e., post-migration education). Therefore several hypotheses have been derived from the mechanisms of the Immigrant Human Capital Investment model (IHCI) to understand immigrants’ investment in post- migration education. The regression analyses exemplify that the investment in post-migration are stronger among immigrants that are staying for a longer duration in the host-country, are being married post-migration, arrive at a younger age, have a higher level in pre-migration education and are from (former) colonies. However, it appears that immigrants with a high educational background do not, as a rule of thumb, have a high SES according to the other dimensions (i.e., occupational status and income), this is, among others, due to the higher incidence of over-education among immigrants. The results of the binary logistic regression shows that the over-education phenomena seems to be caused by the imperfect transferability of skills from the country of origin to the host-country. To what extent over-education is explaining the differences in SES across immigrants and in comparison to Dutch indigenous does not only rest on the wage penalty at a particular moment in time, but more on how long that moment will endure. Hence further research is required. Over and above the results presented in this thesis, our analyses are providing some evidence for a plausible role of discrimination towards these ethnic groups and their socioeconomic status. Table of contents INTRODUCTION ......................................................................................................................................... 5 I. THEORY AND HYPOTHESES ................................................................................................... 10 1. A BRIEF HISTORY OF IMMIGRATION ........................................................................................... 12 1.1 Why the Netherlands? .................................................................................................................... 12 1.2 The Surinamese: Dutch citizens as immigrants ............................................................................... 16 1.2.1 The migration .............................................................................................................................. 16 1.2.2 Integration and socioeconomic status of the Surinamese in the Netherlands ........................... 17 1.3 The Netherlands Antilles ................................................................................................................. 17 1.3.1 The migration .............................................................................................................................. 18 1.3.2 Integration and socioeconomic status of the Antilleans in the Netherlands.............................. 19 1.4 Turks and Moroccans as guest workers ......................................................................................... 20 1.4.1 The migration ................................................................................................................................. 20 1.4.2 Integration and socioeconomic status of Moroccans and Turks in the Netherlands ................. 21 1.5 The socioeconomic status ............................................................................................................... 22 1.6 Hierarchy of ethnic groups .............................................................................................................. 23 2. THE ACCUMULATION OF IMMIGRANTS’ CAPITAL ................................................................................. 25 2.1 The Neo-Capital Theories ................................................................................................................ 25 2.1.1 Human Capital ............................................................................................................................ 26 2.1.2 Cultural capital ............................................................................................................................ 29 2.1.3 Social capital ............................................................................................................................... 30 2.1.3.1 Negative social capital ....................................................................................................... 33 2.1.4 The interaction between Human and Social capital ................................................................... 34 2.1.5 Psychological capital ................................................................................................................... 35 3. POST-MIGRATION INVESTMENTS IN EDUCATION ................................................................................. 36 3.1 Immigrant Human Capital Investment model ................................................................................. 36 3.1.1 Intentions of settlement in the host-country ............................................................................. 37 3.1.2 Transferability of skills ................................................................................................................ 38 3.1.3 Opportunity cost ......................................................................................................................... 40 4. ASSIMILATION AND THE INCIDENCE OF OVER-EDUCATION ................................................................... 41 4.1 Assimilation ..................................................................................................................................... 42 4.2 Over-education ....................................................................................................................................... 44 4.2.1 Career mobility theory ................................................................................................................ 45 4.2.2 Incidence of over-education across minorities ........................................................................... 46 4.2.2.1 Skill transferability ............................................................................................................. 46 4.2.2.2 Ethnic segregation ............................................................................................................. 48 4.2.2.3 Discrimination ................................................................................................................... 50 II. EMPIRICAL EXAMINATION .................................................................................................... 53 5. DATA AND RESEARCH DESIGN ............................................................................................................ 54 5.1 Dependent variables ....................................................................................................................... 55 5.2 First analysis .................................................................................................................................... 57 5.3 Second analysis ............................................................................................................................... 62 5.4 Third analysis ................................................................................................................................... 64 6. METHODOLOGY AND RESULTS ........................................................................................................... 67 6.1 Methodology ................................................................................................................................... 67 6.2 Results ............................................................................................................................................. 68 6.2.1 Results of the first analysis ......................................................................................................... 69 6.2.2 Results of the second analysis ...................................................................................................
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