Europe is facing the challenge of integrating a growing number of immigrants and their offspring. On the one hand immigration can be a necessity to overcome problems arising from demographic changes but on the other hand cultural, social and political issues can hamper the economic potential immigrants have for their host society. In this introductory chapter I examine the bigger picture of immigration and integration in Europe and of the research on immigration. I show that there are several closely interlinked dimensions in the integration process and that - in terms of research on immigration - it is more interesting not to regard exclusively one dimension but to study one dimension in its context.
Personality, ability, trust, motivation and beliefs determine outcomes in life and in particular those of economic nature such as finding a job or earnings. A problem with this type of determinants is that they are not immanently objectively quantifiable. They are rather concepts than exactly measurable and directly observable objects. There is no intrinsic scale - such as in the case of age, years of education or wages. Often we think of these concepts as complex and several items are needed to capture them. In the measurement sense, we dispose of a more or less noisy set of measures, which indirectly express and measure a concept of interest. This way of conceptualizing is used in latent variables modelling. I examine in this chapter in how far economic and econometric literature can contribute to specifying a framework of how to use latent variables in economic models. As a semiparametric identification strategy for models with endogeneous latent factors I propose to use existing work on identification in the presence of endogeneous variables and examine which additional assumptions are necessary to apply this strategy for models with latent variables. I discuss several estimation strategies and implement a Bayesian Markov Chain Monte Carlo (MCMC) algorithm.
Educational attainment, length of stay, differences in national background and language skills play an acknowledged important role for the integration of immigrants. But integration is also a social process, which suggests that psychological factors are relevant. This chapter explores whether and to what extent immigrants and their children need to believe in their ability to control their own success, in other words their sense of control. To quantify this personal trait I use a measure of an individual’s sense of control over outcomes in life - such as finding a job. This measure is known in psychology as "the locus of control". I first estimate an exogenous measure. Then I address the problem that this measure is actually endogeneous in a labor market outcome equation by employing a model in which the sense of control is an endogenized latent factor in a simultaneous equation model. The determinants of this sense of control as well as its effect on the probability of being employed are examined. The model is estimated using an implemented Bayesian Markov Chain Monte Carlo algorithm. Results with endogenized personality indicate that, on average, immigrants believe less than natives in being able to control outcomes in life, but children of immigrants have already a stronger sense of control than their parents. The paper also finds that sense of control over life’s outcomes positively contributes to the probability of being employed. This means that immigrants and their children face a double disadvantage on the labor market: they are disadvantaged because of their status as an immigrant and they have a lower sense of being able to control their situation, which is a personality trait that matters on the labour market.
Identity can be an important driving force for educational performance. Immigrants and their children face the challenge of identifying with their host country’s culture. This paper examines whether young immigrants and their children who identify stronger with the German culture are more likely to increase their educational outcomes. I use a concept of ethnic identity which is designed to capture Germanness in immigrants’ day-to-day routine - based on self-identification, language skills and cultural habits. The research design takes into account the issue of endogeneity of ethnic identity in an educational outcome equation by measuring education and identity at different moments and by using an endogenous latent factor methodology. The paper finds that identification with the German culture has an overall positive effect on educational outcomes and diminishes and renders insignificant the educational gap between immigrants and the second generation. The paper’s results indicate that the second generation identifies stronger with the German culture than immigrants, no matter whether of German, European, Central European or Turkish background. Apart from the immigrant generation, own low educational attainment and high mother’s educational attainment matter for identification with the German culture.