Integration of Immigrants in Germany Economic Relevance, Measurement, and Empirical Findings Florian Peters-Olbrich Integration of Immigrants in Germany Economic Relevance, Measurement, and Empirical Findings Inauguraldissertation zur Erlangung des akademischen Grades eines Doktors der Wirtschaftswissenschaften durch die Wirtschaftswissenschaftliche Fakultät der Westfälischen Wilhelms-Universität Münster März 2019 vorgelegt von Florian Peters-Olbrich, M.Sc. Westfälische Wilhelms-Universität Münster Institut für Siedlungs- und Wohnungswesen Centrum für angewandte Wirtschaftsforschung Münster (CAWM) Am Stadtgraben 9 48143 Münster Dekanin: Prof. Dr. Theresia Theurl Erstgutachter: Prof. Dr. Ulrich van Suntum (Westfälische Wilhelms-Universität Münster) Zweitgutachterin: Prof. Dr. Theresia Theurl (Westfälische Wilhelms-Universität Münster) Tag der mündlichen Prüfung: 13.05.2019 Florian Peters-Olbrich Integration of Immigrants in Germany Wissenschaftliche Schriften der WWU Münster Reihe IV Band 16 Florian Peters-Olbrich Integration of Immigrants in Germany Economic Relevance, Measurement, and Empirical Findings Wissenschaftliche Schriften der WWU Münster herausgegeben von der Universitäts- und Landesbibliothek Münster http://www.ulb.uni-muenster.de Bibliografische Information der Deutschen Nationalbibliothek: Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über https://www.dnb.de abrufbar. Dieses Buch steht gleichzeitig in einer elektronischen Version über den Publikations- und Archivierungsserver der WWU Münster zur Verfügung. https://www.ulb.uni-muenster.de/wissenschaftliche-schriften Florian Peters-Olbrich „Integration of Immigrants in Germany. Economic Relevance, Measurement, and Empirical Findings“ Wissenschaftliche Schriften der WWU Münster, Reihe IV, Band 16 Verlag readbox publishing GmbH – readbox unipress, Münster http://unipress.readbox.net Zugl.: Diss. Universität Münster, 2019 Dieses Werk ist unter der Creative-Commons-Lizenz vom Typ 'CC BY-NC-SA 4.0 International' lizenziert: https://creativecommons.org/licenses/by-nc-sa/4.0/deed.de Von dieser Lizenz ausgenommen sind Abbildungen, welche sich nicht im Besitz des Autors oder der ULB Münster befinden. ISBN 978-3-8405-0215-6 (Druckausgabe) URN urn:nbn:de:hbz:6-04119738833 (elektronische Version) direkt zur Online-Version: © 2019 Florian Peters-Olbrich Satz: Florian Peters-Olbrich Umschlag: ULB Münster Content 1 Introduction ................................................................................................. 1 2 Definitions .................................................................................................... 5 2.1 (Im)migration and (Im)migrants ........................................................... 5 2.2 Assimilation, Integration and other Concepts of Cohabitation ............ 6 3 Economic Relevance of Integration ......................................................... 19 3.1 Relationship of Immigration, Diversity and Integration ........................ 19 3.2 Basic Economic Effects of Immigration ............................................. 21 3.2.1 Theoretical Analysis ..................................................................22 3.2.2 Summary of Empirical Analysis ................................................30 3.3 Economic Effects of Diversity and the Necessity of Integration ....... 36 3.3.1 Why is Integration Important? ...................................................38 3.3.2 Positive Effects of Diversity in an Integrated Society ...............40 3.3.3 Negative Effects of Diversity without Integration ....................46 3.4 Fiscal Effects of Immigration and Integration .................................... 50 4 Migration History of Germany ................................................................ 65 5 Empirical Literature about Integration .................................................. 79 5.1 Measuring Integration with International Data ................................... 80 5.2 Measuring Assimilation with German Data ....................................... 81 5.3 Contributions and Limits of this Integration Measurement for Germany .............................................................................................. 86 6 Technical Remarks and Implementation of the Model ......................... 89 6.1 Description of Data and Variables ...................................................... 89 6.1.1 Survey of the German Microcensus ..........................................89 6.1.2 Immigrants within the German Microcensus ............................90 6.1.3 Important Regions of Origin and their Differentiation in the Microcensus ...............................................................................97 6.1.4 Selection of Material Explanatory Variables .......................... 102 6.2 Model Description............................................................................. 119 6.2.1 The Probit Model to Predict Immigrant Status ....................... 120 I 6.2.2 Immigrants as “Rare Events” in the Data ............................... 123 6.2.3 Three Different Model Specifications ..................................... 125 6.3 Additional Methodical remarks ......................................................... 126 6.3.1 Repeated Cross-sectional Data and Selective Remigration .... 126 6.3.2 Systematic Differences between Females and Males ............. 128 6.3.3 Test for Multicollinearity ........................................................ 129 7 Integration Index Results and Interpretation ....................................... 131 7.1 What determines Integration Success? Five Hypotheses .................. 131 7.2 Cross-Sectional Results in 2010 ........................................................ 149 7.2.1 State of Integration for 2010 ................................................... 149 7.2.2 Interpretation of Marginal Effects ........................................... 152 7.2.3 The Duality of Economic and Socio-cultural Integration ....... 156 7.3 Repeated Cross-Sectional Analysis ................................................... 160 7.3.1 Development of Integration from 2007 to 2012 ..................... 160 7.3.2 Development of Integration from 1996 to 2012 ..................... 162 7.3.3 Marginal Effects at Different Points in Time .......................... 166 7.4 Comparing the First and Second Immigrant Generation .................. 168 7.5 Interpretation and Discussion of Results ........................................... 170 7.6 Political Implications ......................................................................... 198 8 Conclusion ................................................................................................ 207 9 Publication Bibliography ........................................................................ 211 10 Attachments .............................................................................................. 246 II List of Figures Figure 1: Concepts of Cohabitation. ................................................................9 Figure 2: Immigration, Diversity and Integration .........................................20 Figure 3: Neoclassical labour market with fixed capital ...............................23 Figure 4: Neoclassical Labour Market Model with Heterogeneous Labour ....28 Figure 5: Fiscal Impact of Immigration and Integration ...............................52 Figure 6: German Ancestry in America 2010 ...............................................66 Figure 7: Share of Foreigners in German Society 1961-2012 ......................71 Figure 8: Net Migration to Germany .............................................................76 Figure 9: Sense of belonging to German society by region of origin ...........85 Figure 10: Migration status in German microdata and its implementation ......91 Figure 11: Regions of Origin Model Specification 1/2 ................................ 100 Figure 12: Regions of Origin Model Specification 3 ................................... 101 Figure 13: Probability Function in the Probit Model ................................... 121 Figure 14: Self-Selection Hypothesis ........................................................... 139 Figure 15: Integration Index 2010 ................................................................ 151 Figure 16: Model Specification 1 Average Marginal Effects in 2010 ......... 154 Figure 17: Integration in 2010 by Country of Origin ................................... 158 Figure 18: Integration Index Model 2 by Region, 2007-12 ......................... 161 Figure 19: Integration Index 1996-2012 ...................................................... 163 Figure 20: Average Marginal Effects, Model Specification 3 ..................... 167 Figure 21: Year of Arrival from “Guest Worker” Immigrants .................... 173 Figure 22: Share of Foreigners with Temporary Resident Status only ........ 190 Figure 23: Integration in 2010 by Gender .................................................... 191 Figure 24: Year of Arrival, South/East Asian Immigrants .......................... 193 Figure 25: Model 1 Robustness Check - General ........................................ 257 Figure 26: Model 1 Robustness Check of the AME .................................... 259 Figure 27: Number of Observations in Model Specification 3 by Country of Origin ...................................................................................... 261 Figure 28: Integration