A new GLO Discussion Paper finds that the immigrant-native gap in risk preferences has widened for recent immigration cohorts, while for time preferences the gap remains large.

GLO Discussion Paper No. 1055, 2022

Immigrant-native gap in risk and time preferences in Germany: Levels, socio-economic determinants, and recent changes – Download PDF
by Deole, Sumit S. & Rieger, Marc Oliver

GLO Fellow Sumit Deole

Author Abstract: We present new descriptive evidence on the immigrant-native gap in risk and time preferences in Germany, one of the most preferred host countries for immigration. Using the recent waves of the Socio-Economic Panel (SOEP) dataset, we find that the immigrant-native gap in risk preferences has widened for recent immigration cohorts, especially around the 2015 European Refugee Crisis. We attribute the recent widening to decreased assimilation rates of new immigrants caused by a reduced integration due to sudden increases in immigrants flows from culturally diverse parts of the world, particularly around the year 2015. We also find that the immigrant-native gap varies across different migrant groups: “Opportunity seekers”, which we define as economic immigrants who intend to stay in Germany only temporarily, are very similar in their risk preferences to natives. Other immigrants, however, are substantially more risk-averse than natives. A smaller gap in risk preferences is also found among migrants who are female, highly educated, proficient in the host language, self-employed and working in predominantly high-skilled jobs. Concerning time preferences, although a noticeably large immigrant-native gap is evident, the gap is not found to vary across most individual-level socio-economic variables.

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