What difference does a country make? Earnings by Soviets in the Soviet Union and in the United States.(Special Issue: The Economics of Immigrant Skill and Adjustment)

I. INTRODUCTION

A major theme in the contemporary literature on emigration is the speed with which the assimilation of emigres takes place and the factors which influence this process in the host country. An important element of success in the host country is the nature of background forces from the sending country, for example, own human capital, early patterns of career development, and family characteristics. Moreover, it is often argued that these background characteristics are important as a determinant of earnings in both the sending country and subsequently after emigration in the host country. Indeed, a critical issue in the adjustment process is the transferability of skills, especially those derived from, but ultimately used in, very different socioeconomic settings. An important case of emigration is those persons educated in the planned socialist economy of the former Soviet Union, but moving to and seeking economic success in the market setting of the United States.

In this study, we use the Soviet Interview Project (SIP) and the 1990 United States Census (Census) to identify and to track a sample of persons who emigrated from the Soviet Union to the United States. Beyond examining important basic characteristics of income change, an objective of this paper is to specify and to estimate earnings functions relating earnings in the Soviet Union and subsequent earnings in the United States to background factors derived from the Soviet experience.

Why should we be interested in the issues raised here? Much of the evidence on the success (or failure) of emigres in a new setting relates to the influence of country background factors, and how those factors influence economic success (or failure) in the new host setting. In this paper we track the same people (or a cohort) to understand who has succeeded (or failed), and the importance of an individual's specific country-of-origin characteristics, such as education, in determining outcomes. The issues raised here have implications well beyond the specific case examined. Our study considers the impact of background variables from a planned socialist setting subsequently influencing outcomes in a market setting. This is a pattern of mobility common in the 1990s.

This paper is divided into six sections. In Section II we provide a brief survey of the literature relevant to our analysis. In Section III we provide a discussion of the methodology that will be used and the nature of the data. In Section IV we present an analysis of basic descriptive statistics. In Section V we turn to an analysis of earnings functions to discover what explanatory variables have been important, and how the importance of these forces has changed from the initial experience in the sending country to the subsequent experience in the host country. Finally in Section VI we summarize our findings and offer suggestions for further analysis.

II. BACKGROUND: THE EXISTING EVIDENCE

There is a large body of literature relating to the forces that influence the success of emigres in a host country (Chiswick, 1986; Schmidt, 1994a, 1994b). In addition to the importance of sending country characteristics (Borjas, 1987), country-of-origin characteristics are often said to be important proxies for adaptability in a host country. These issues have been examined in some detail for the United States (Jasso and Rosenzweig, 1986, 1990; Chiswick, 1978; Borjas, 1992). The work of Borjas and Chiswick has paid special attention to the issue of skill transferability from sending country to host country.

Since the 1960's there has been substantial immigration from the former Soviet Union (FSU) of major importance to both the sending country (Vishnevsky and Zayonchkovskaya, 1994) and the major receiving countries, specifically the United States (Chiswick, 1993) and Israel (Sabatello, 1994). Although the migratory flows varied over time with policy changes in the FSU (Freedman, 1989) and in the United States (Tress, 1991), the large numbers emigrating to the United States have been the focus of considerable research (Simon, Simon and Schwartz, 1982; Simon, 1985; Gold, 1994). Of special interest to economists has been the economic adjustment of Soviet emigres in the United States, and especially the importance of explanatory factors such as linguistic capability and education (Chiswick, 1993, Chiswick, 1995). Indeed, beyond analyses of the general case, a great deal of attention has been given to important regional cases such as New York (Horowitz, 1993, Orleck, 1987, Markowitz, 1993).

Although this study focuses on adjustment in the United States, the large number of emigres from the FSU settling in Israel (Sabatello, 1994) has warranted attention. This attention has focused on both the macroeconomic impact on the Israeli economy (Hercowitz and Meridov, 1991) and on microeconomic adjustment. Empirical evidence suggests that the skilled workers from the FSU were unable to sustain their occupational status in the host country (Weiss and Gotlibovski, 1994).

It has been shown (Duleep and Regets, 1993), however, that country-of-origin effects dissipate rather more quickly than earlier thought to be the case, though case studies, for example, Gang and Zimmermann's (1996) study pertaining to Germany, raise doubts on this issue. None of these studies have analyzed which factors contributed to immigrants success in their home country and compared them to the factors influencing success in the host country.

III. METHODOLOGY AND DATA

The analysis in this paper proceeds in two sequential steps. In the first step, we characterize the economic structure of our sample of individuals. Here we examine a number of measures of income change and income mobility in order to …