Table 1 provides the results of the three parameters on naturalisation detailed in Eq. (1), as well as a number of control variables which feature substantial changes over time, and are thus not captured by the individual fixed-effects. Model 1 contains only observations of individuals with employment, whereas Model 2 also includes observations where migrants are unemployed, which is of interest in light of our argument that the traditional mechanisms underlying the citizenship premium are particularly relevant to get access to the labour market rather than earnings from labour. Results show that men and women enjoy a minor one-time boost in Log labour income of 1.8% (100.008) and 1.4% (100.006) after naturalisation. These findings provide some support for the signalling potential of citizenship and are consistent with findings from earlier studies in Norway (Bratsberg and Raaum 2011, p. 197), Sweden and Denmark (Helgertz et al. 2014, p. 352), Germany (Steinhardt 2012, p. 818) and the USA (Bratsberg et al. 2002, p. 582). Yet, these studies provide only limited theoretical guidelines that explain why we only observe a relatively modest effect. Our interpretation is that the signalling potential of citizenship is particularly relevant for unemployed migrants, since having employment serves as a positive signalling device in its own right. The interaction between whether a migrant naturalises during the observation period and years since migration is positive and statistically significant. This confirms that migrants who naturalise perform better in the labour market, including prior to naturalisation. The coefficient of the interaction between whether an individual has naturalised and years since naturalisation is negative, indicating that the earnings profile develops faster for migrants who are not (yet) naturalised. In sum, income from labour particularly increases leading up to naturalisation. These findings are contrary to the traditional understanding of a citizenship premium, but consistent with the notion of anticipation. Migrants anticipate potential rewards and opportunities of naturalisation by investing in their own human capital development. In line with earlier theorisation in the literature (Bratsberg et al. 2002, p. 582–583), we hypothesise that the steeper wage gains prior to naturalisation are the result of these investments.
Table 1 Individual fixed-effects regression on (CPI-adjusted) Log labour income of male and female immigrants with and without paid employment, cohorts 1999–2002. Regarding our control variables, we observe a positive relationship between years since migration and earnings, all else constant. Furthermore, we find that having a partner is generally associated with increased earnings among men, whereas for women the effects are less positive (Kanas et al. 2011, p. 113). Having young children in the household has a modest positive effect on the Log labour earnings of men, whereas the effect is strongly negative for female immigrants. Clearly, these events have different implications in the life course of men and women, respectively.
In line with our expectations, citizenship acquisition only provides a limited one-time boost in earnings for employed men and women. However, if our expectation that the signalling potential of citizenship matters predominantly for employment rather than earnings holds, then the coefficient for the ‘naturalisation’ parameter should be more positive when migrants without employment are added to the model. Model 2 of Table 1 provides the results of the individual fixed-effects regression including observations where migrants are unemployed. Compared to the findings in Model 1, the coefficients are substantially larger.Footnote 6 This suggests that the subsequent effect of naturalisation on immigrant earnings is stronger for migrants without employment. We theorise that this is the case because being employed has a positive signalling effect in its own right. Thus, these employed individuals do not need citizenship acquisition as much in the labour market. Moreover, for citizenship to have an effect for employed migrants implies the assumption that these migrants reorient themselves in the labour market after naturalisation. Our findings suggest that the traditional arguments for a citizenship premium are particularly relevant in the context of gaining access to the labour market (i.e. having employment) rather than occupational mobility (i.e. earnings).
Although the positive labour market outcomes prior to citizenship acquisition suggest an anticipation effect, they do not provide any indication regarding the exact shape of the slope before and after naturalisation. If anticipation is the underlying mechanism, then we would expect earnings from labour to peak around the moment of citizenship acquisition. To analyse this in detail, we perform a distributed individual fixed-effects regression based on Eq. (2). We analyse immigrants who naturalise during the observation period, since the focus of these analyses is not so much on whether citizenship matters or not (which is the purpose of Table 1), but rather how it matters. Table 2 shows that, as expected, immigrant earnings increase leading up to citizenship acquisition, and peak around the moment of naturalisation (the year before and after naturalisation for men and women, respectively). This confirms hypothesis 1 and is in line with our theorisation that the explicit decision to naturalise in the future results in the corresponding decision to invest more heavily in host country-specific human capital already prior to naturalisation (Bratsberg et al. 2002, p. 582). We assume that the more positive labour market performance prior to naturalisation is a reflection of said investment. After naturalisation, the additive effect of naturalisation decreases, particularly for male immigrants.Footnote 7
Table 2 Distributed individual fixed-effects regression on (CPI-adjusted) Log labour income of male and female immigrants with paid employment who naturalise during the observation period, cohorts 1999–2002. The next question is to whom citizenship matters. Analogous to the state-of-the-art literature (Bratsberg and Raaum 2011; Engdahl 2014; Helgertz et al. 2014; Steinhardt 2012), we start by performing separate analyses for large origin regions. Tables 3 and 4 provide results for men and women, respectively. First, we observe that earnings of naturalising migrants from all origin groups develop faster over time, including prior to naturalisation. Furthermore, income from labour develops faster prior to naturalisation than afterwards for all migrant groups except women from the Middle-East, indicated by the negative interaction between whether an individual is naturalised and years since naturalisation. In line with the aggregate analyses, we observe a one-time boost in Log labour income after naturalisation for male immigrants from Africa, Asia and the Middle-East, and female immigrants from Asia, South America and the Middle-East. More specifically, male immigrants enjoy an increase between 3.8 and 4.9% in Log labour income, and female immigrants an increase between 3.5 and 6.7%. In contrast, the coefficient is negative for women from the EU.
Table 3 Individual fixed-effects regression on (CPI-adjusted) Log labour income of male immigrants with paid employment, by origin regions, cohorts 1999–2002. Table 4 Individual fixed-effects regression on (CPI-adjusted) Log labour income of female immigrants with paid employment, by origin regions, cohorts 1999–2002. Due to substantial demographic and institutional variation between these large origin groups, it is hard to identify underlying mechanisms that explain these empirical differences. We hypothesise that these findings may partly reflect variation in economic development between origin countries. Insofar as citizenship matters in terms of earnings from labour, we expect that it will be particularly relevant to migrants from less developed countries. Table 10 provides results of separate analyses for migrants with employment from low and high developed countries. Individuals have been classified as originating from low or high developed countries based on the median human development score. Results indicate that naturalising migrants from all origin groups perform better in the labour market, including prior to naturalisation. Moreover, the earnings profile develops faster prior to naturalisation than afterwards. However, the one-time boost in earnings is positive and statistically significant for migrants from less developed countries of origin, whereas this is not the case for those from high developed countries. Among migrants from less developed countries, we observe an increase of 3.2 and 4.7% in Log labour income for male and female immigrants, respectively. These findings provide support for hypothesis 2, in which we argue that citizenship particularly matters for vulnerable migrant groups who struggle in the labour market (Bratsberg et al. 2002, p. 590; Fougère and Safi 2011, p. 138). Migrants who are assumed to be negatively selected by employers, such as those from economically less developed countries of origin, will particularly benefit from the signalling potential of the host country citizenship to mitigate their disadvantaged position. Conversely, migrants from more developed countries may not face the same preconceptions and accordingly do not need the host country citizenship to compensate.
In sum, we observe an effect of citizenship on immigrant earnings even when controlling for endogeneity, but (1) it does not apply to all migrant groups and (2) does not solely manifest as a consequence of naturalisation itself but also from the decision to naturalise in the future. However, our findings do not provide an indication where these effects in Log labour income are coming from. On the one hand, naturalisation may facilitate access to higher paying jobs, but on the other hand, the effect might also stem from more working hours. To analyse this in detail, we include a control for working hours to the main model. Data on working hours are only available for migrant cohorts 2001 onwards, so we perform the main analysis (without a control for working hours) for cohorts 2001–2002 to facilitate the comparison and to provide a clear indication as to the relevance of working hours to the model. Table 5 shows the findings for men and women, respectively. Results from the model without a control for working hours are similar to those in the main analysis (Table 1), except that the upward shift in income is more pronounced. However, when a control for working hours is added to the model, this ‘Naturalisation’ coefficient changes back to the magnitude of the main analysis. For women, the coefficient even becomes negative. More generally, all the coefficients on naturalisation decrease when controlling for working hours. These findings thus suggest that insofar as there is an effect of naturalisation, it is in part explained by working hours.
Table 5 Individual fixed-effects regression on (CPI-adjusted) Log labour income and (CPI-adjusted) Log labour income when controlling for working hours of male and female immigrants with paid employment, cohorts 1999–2002. Naturalisation has the potential to stimulate earnings from labour for some immigrant groups. But to what extent is the relevance of citizenship explained by variation in labour market sectors that migrants are employed in? Tables 6 and 7 provide estimates for employed men and women, respectively, when labour market sectors are added to the main model. Since information on labour market sectors is unknown for a number of individuals, we also repeat the main analysis (without controlling for labour market sectors) for the population where information on sectors is available. Our findings reveal some discrepancies in Log labour income between sectors (see also Tables 11 and 12 in the Appendix). Detailed analyses indicate that heterogeneity in Log labour income between labour market sectors is largely explained by discrepancies in levels of education, which are mostly captured by the individual fixed-effects (the relevance of education is analysed in detail in the chapter ‘Robustness analyses’). The substantial number of immigrants working in jobs in business services, such as call centres, packaging and office cleaning, enjoy relatively low earnings. In contrast, earnings are high in information and communication (e.g. system administrators, technical support of companies, radio and television) and the financial services (e.g. banks, investment companies, credit unions), although the number of migrants working in these sectors is comparatively small. Our data do not allow for a disentanglement of jobs in the public sector and the care sector. While a substantial proportion of immigrants are represented in this category (particularly female immigrants), earnings tend to be relatively low in the care sector, which may explain why the coefficients for this category are not higher. With regard to citizenship acquisition, when labour market sectors are added to the model, the coefficients of the various naturalisation variables remain almost identical for both men and women. We therefore conclude that the effect of citizenship is not explained by variation in labour market sectors.
Table 6 Individual fixed-effects regression on (CPI-adjusted) Log labour income and (CPI-adjusted) Log labour income when controlling for labour market sectors of male immigrants with paid employment, cohorts 1999–2002. Table 7 Individual fixed-effects regression on (CPI-adjusted) Log labour income and (CPI-adjusted) Log labour income when controlling for labour market sectors of female immigrants with paid employment, cohorts 1999–2002.