Consumer Behavior and Immigrant Assimilation: A comparison of the United States, Britain and Germany, 1889/1890
NBER Historical Working Paper No. 6
This paper utilizes household-level budget data from the 1889/90 United States Commissioner of Labor survey to estimate the full Almost Ideal Demand System with demographic and other covariates. Price data were obtained from the Aldrich Report of 1892. The purpose is to make better use of the entire data set by incorporating demographic variation and then to examine whether the consumption patterns of immigrants and the native born were significantly different once the effects of total expenditure, prices, family composition, region of residence, industry, occupation, and age of household head were taken into account. Comparisons of Engel curves are also made to households in Great Britain and Germany. Results from estimation of Engel curves and the full model (with prices) for six commodity categories (food, housing, clothing, fuel and lighting, liquor and tobacco, and "Other" goods and services) revealed that differences across ethnic groups within the United States could be reduced but not eliminated by the effects of the covariates. The foreign born spent relatively more on food and on liquor and tobacco. Although differences by ethnicity existed, both British and German immigrants to the United States were closer in their consumption patterns to workers in the area of destination than in the area of origin. Inclusion of prices did reduce the regional effects (within the United States) found in the Engel curves. Demographic effects were important. Food, housing, and fuel and lighting appeared as necessities, while clothing, liquor and tobacco, and "Other" goods and services were luxuries.