The Role of Source- and Host-Country Characteristics in ... - CReAM

migrating. For first-generation immigrants, work experience prior to their arrival in the
host country might be positively correlated with the source-country’s FLFPR. If this is
true, than the estimated effect of the latter does not only reflect the role of source-country
culture, but partly contains the effect of the level of job-related human capital accumulated
before migration. Having information on the human capital and labor supply of the
immigrant’s parents can help to solve this problem, as parental economic behavior in the
source country may serve as a proxy for the child’s labor supply before migrating.
The estimation results of models (2) and (3) including controls for the parents’ highest
level of education and their labor market status when their daughter was 14 years are
displayed in Table 5.
5.3 Ratio of FLFP rate to MLFP rate as a proxy for sourcecountry
culture
A possible concern when attempting to assess the effect of source-country culture on female
immigrant labor supply is that such an approach might suffer from an omitted variable
bias. If there exist any unobserved economic conditions in the source country (beyond
the macro indicators we controlled for) that affect an immigrant woman’s labor supply
decisions, and if these factors are further correlated with the source-country FLFP rate,
then the estimated effect of our cultural proxy will be biased, as it contains the effect of
these unobserved conditions as well. Although it is hard to think of any macroeconomic
conditions that fulfill both conditions, we attempt to rule out the possibility of the existence
of an omitted variable bias by checking the robustness of our cultural proxy. Following
Blau and Kahn (2011) and Blau et al. (2011), we use the LFP rate of women relative to
men’s (i.e., FLFP rate/MLFP rate) instead of the FLFP rate as our cultural proxy. This
relative measure is appropriate in that it captures the gender division of labor explicitly.
If there exist any unobserved macroeconomic conditions correlated with a country’s LFP
rate, these factors must differently affect the LFP rate of men and women in order to
still bias our estimates. A further advantage of using the ratio of FLFP to MLFP is that
it implicitly adjusts for problems in measuring the labor force, particularly at different
levels of economic development, at least to the extent that such problems affect men’s and
women’s measured participation rates similarly (Blau et al., 2011).
The estimation results of model (2) using FLFP rate/MLFP rate as our cultural proxy
are displayed in Table ??.
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