The Integration of Immigrants from the Former Soviet Union in the Israeli Labor Market

This paper analyzes the recent mass immigration from the USSR to Israel. We examine three interrelated features of the assimilation process; the rise in the productive capacity of immigrants as they gradually adapt to the Israeli labor market, the rising rewards that immigrants receive for their imported skills and the role of the family in facilitating the acquisition of local skills. We estimate wage regression to capture the growth in wages with time spent in Israel, for immigrants with different skills. We use these estimates for quality adjustment of aggregate labor and show that the aggregate capital labor ratio remained almost constant during the period of mass immigration. This explains the stable average wage of native Israelis combined with rising wages of immigrants. We find a large marriage premium for immigrants, in contrast to the small and insignificant marriage premium among native Israelis. We interpret this difference as evidence for stronger within family coordination of work activities among immigrants.