The following table shows the average earnings of various immigrant cohorts and the native born for 2005 and 2010 (all values expressed in 2010 dollars). Note: YSM refers to the average years since migration.

a) Calculate the cross-sectional entry effect (in levels) for the 2000-04 cohort.

b)Use the 2005 cross-section to estimate the effect on earnings of being in Canada and additional five years for the 1990-94 cohort; that is, the effect of being in Canada 17.5 instead of 12.5 years. Use this to predict 1990-94's earnings in 2010.

c) Compare your estimate from part (b) to 1990-94's actual earnings in 2010. Provide a better estimate of the earnings assimilation of the 1990-94 cohort. Explain and interpret. Compare this to the cross-sectional estimate from part (b) and suggest an explanation as to why they are different.
 

Transcribed Image Text:

Cohort Label Native-born Native IM55P IM5559 IM6064 Pre-1955 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 Average Earnings by Immigrant Cohort 2005 1990-94 1995-99 2000-04 2005-10 YSM Earnings ($) N/A 52.5 47.5 42.5 IM6569 37.5 IM7074 32.5 IM7579 27.5 IM8084 22.5 IM8589 17.5 IM9094 IM9599 IM0004 IM0510 12.5 7.5 2.5 64,778 78,179 84,124 81,041 76,992 75,444 70,287 68,018 54,478 54,478 57,430 49,898 YSM N/A 57.5 52.5 47.5 42.5 37.5 32.5 27.5 22.5 17.5 12.5 7.5 2.5 2010 Earnings ($) 67,247 82,584 89,472 84,469 81,410 81,139 78,927 73,671 63,253 59,185 63,253 61,699 53,888 Cohort Label Native-born Native IM55P IM5559 IM6064 Pre-1955 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 Average Earnings by Immigrant Cohort 2005 1990-94 1995-99 2000-04 2005-10 YSM Earnings ($) N/A 52.5 47.5 42.5 IM6569 37.5 IM7074 32.5 IM7579 27.5 IM8084 22.5 IM8589 17.5 IM9094 IM9599 IM0004 IM0510 12.5 7.5 2.5 64,778 78,179 84,124 81,041 76,992 75,444 70,287 68,018 54,478 54,478 57,430 49,898 YSM N/A 57.5 52.5 47.5 42.5 37.5 32.5 27.5 22.5 17.5 12.5 7.5 2.5 2010 Earnings ($) 67,247 82,584 89,472 84,469 81,410 81,139 78,927 73,671 63,253 59,185 63,253 61,699 53,888

Answer rating: 100% (QA)

a Calculating the crosssectional entry effect in levels for the 200004 cohort The crosssectional ent... View the full answer