Immigrants' initial steps in Germany and their later economic success

In line with the emerging research that acknowledges the importance of the process character of immigrants' labour market integration, this paper examines the existence of path dependencies of early employment trajectories on later labour market outcomes. Theoretically we are interested in establishing whether career trajectories provide a distinct signal, used by both employers and employees: a signal that operates apart and beyond the accumulation of host-country relevant resources, especially, host-country labour market experience or training. The analyses are performed with the help of a unique dataset comprised of recent immigrants from the former Soviet Union in Germany. Sequence analysis techniques and multivariate regressions are applied. Results show that starting in higher-status employment leaves a distinguishable imprint on immigrants' later occupational standings, even after the returns to the skills associated with early trajectories are taken into account. At the same time, initial career trajectories do not have any direct effect on wages, apart from the pay-off to relevant skills acquired while pursuing these careers. The findings are discussed in concurrence with the human capital and signalling theories.