Immigrants' earnings and workplace characteristics

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This article analyses the immigrant-native wage differentials in Spain, which only recently has become a host country. The paper exploits the Earnings Structure Survey 2006, which is the first nationally representative sample of both foreigner and Spaniard employees. Using the Machado-Mata econometric procedure, wage differentials between locals and foreigners are decomposed into the gap related to characteristics and that due to different returns to endowments (i.e., discrimination). We found that, in absolute terms, the latter component grows across wage distribution, reflecting the existence of a kind of glass ceiling consistent with the evidence of over-education found by previous research.

This paper examines immigrant wage growth taking into account selective out-migration using administrative data from the Netherlands. We also take into account the potential endogeneity of the immigrants' labor supply and their out-migration decisions on their earning profiles using a correlated competing risk model, but we also use standard estimations as done in previous literature. We distinguish between two types of migrants: labor and family migrants given their different labor market and out-migration behavior. We find that simple models lead to biased estimates of the wage growth of immigrants. Controlling for the selective out-migration and endogeneity of labor supply, we find that labor out-migrants are positively selected but family out-migrants are negatively selected. Furthermore, the findings underscore the importance of taking into account the endogeneity of labor supply and outmigration when estimating immigrants' wage growth.

2008

In this paper we estimate the impact of inward migration flows on the Spanish wage structure over the period 1995-2002 by constructing counterfactual wage distributions that provide the wages that would have been observed had individual and job characteristics remain constant over time. Hence, we compute the impact of immigration on the wage distribution from (i) the estimated wage gaps between similar immigrants and native workers and (ii) the changes in the composition of employment associated to the arrival of new immigrants. Overall, we find that (i) the effects of immigration on wage changes are small and only noticeable when job characteristics are included as determinants of wages, and (ii) the correlation between the incidence of immigration in each decile of the wage distribution and the change in native wages not explained by changes in their individual and job characteristics is positive. These results suggest that other factors, besides immigration, should be identified as the key determinants of the wage moderation observed since the early nineties in Spain.

Journal of Applied Economics, 2010

This paper analyzes the wage differentials in Spain between local and foreign employees from Latin America and the Caribbean. It also explores the earnings gap between Latin American employees and other groups of foreign workers from both developing and developed countries. The study is based on the Wage Structure Survey 2006, which is the first nationally representative sample of both foreign and Spanish employees. Using the Machado-Mata econometric procedure, earnings differentials across the whole wage distribution are decomposed into a component related to observable characteristics and another associated to different returns to such endowments. First, we find that, in absolute terms, the earnings differential between Latin American and Caribbean immigrants and natives that is not explained by observable characteristics increases across the wage distribution. While the large gap at the top might be mainly explained by problems of transferability of skills among immigrants, the low differential at the bottom is likely to be related to the compressive effect exerted by labor market institutions such as the minimum wage and collective agreements. A quite similar pattern is observed when they are compared with developed countries´ workers. Secondly, there does not seem to be a significant wage gap between Latin American and the rest of foreign employees from developing countries, possibly because immigrants are largely employed in low-skill jobs where Spanish proficiency is not an essential asset.

Journal of Population Economics, 2005

We analyse the impact of immigrants on natives’ wages from reduced form wage equations for The Netherlands, United Kingdom and Norway. We find very small effects on natives’ wages and no dominant robust patterns of substitution and complementarity. Effects on earlier immigrants’ own wages are larger but less reliable. Further work should focus on these own effects

Labor: Demographics & Economics of the Family eJournal, 2016

This paper explores the impact of educational attainment on immigrant earnings in Spain using a Quantile Regression approach. Most of the previous research on the impact schooling on earnings has focused on the mean effect neglecting the discrepancies that arise from unobserved heterogeneity. This paper uses the Spanish National Immigrant Survey (NIS), a large-scale immigration survey published by the Spanish National Statistics Institute in 2008. We find that the return to higher education is on average roughly 17%. Interestingly, the impact is twice as strong (20.7%) for immigrants at the top two quintile(s) of the conditional earnings distribution than for those at the bottom of the distribution (10%). This result suggests that the benefits derived from higher education are particularly relevant for individuals with stronger unobserved abilities and marketable skills. By contrast, individuals in the middle and particularly lower quintiles fail to reap a significant return. The la...

Labour Economics, 2007

Does Immigration Affect Wages? A Look at Occupation-Level Evidence * Previous research has reached mixed conclusions about the effect of higher levels of immigration on the wages of natives. This paper reexamines this question using data from the Current Population Survey and the Immigration and Naturalization Service and focuses on differential effects by skill level. Using occupation as a proxy for skill, we find that an increase in the fraction of foreign-born workers tends to lower the wages of natives in blue collar occupations-particularly after controlling for endogeneity-but does not have a statistically significant negative effect among natives in skilled occupations. The results also indicate that immigrants adjusting their immigration status within the U.S., but not newly arriving immigrants, have a significant negative impact on the wages of low-skilled natives. This suggests that immigrants become closer substitutes for natives as they spend more time in the U.S.

Using matched employer-employee data, we analyse the impact of immigrants on natives' employment in Portugal. Using different model specifications, we show that the natives and immigrants are 'complements' at most occupation levels, in the sense that they are jointly hired and fired. Controlling for different skill-level groups as well as for temporary and permanent jobs, the estimates show that, contrary to the evidence from some existing literature, the natives at the lower end of the skills spectrum are not affected by the presence of immigrants as well.

British Journal of Industrial Relations, 2011

We analyse the earnings of immigrants from the EU's new member states (NMS) using a large‐scale dataset with information on employees in Ireland. We find that the average earnings difference between these immigrants and natives is between 10 and 18 per cent, depending on the controls used. However, the difference is found to be lower for people at the lower end of the earnings distribution. It is also generally lower for people at the lower end of the education distribution. We find mixed evidence on whether unions have an impact on the wages of immigrants from the NMS, although such immigrants appear to suffer a wage penalty as a result of being in firms that provided training to a significant proportion of their workforce.

Empirical Economics, 2004

In this paper, we analyze immigrant wage gaps and propose an extension of the traditional wage decomposition technique, which is a synthesis from two strains of literature on ethnic/immigrant wage differences, namely the ‘assimilation literature’ and the ‘discrimination literature’. We estimate separate wage equations for natives and a number of immigrant groups using panel data sample selection models. Based on the estimations, we find that the immigrant wage gap is caused by a lack of qualifications and incomplete assimilation, and that a large fraction of that gap would disappear if only immigrants could find employment and thus accumulate work experience.

Labour Economics, 2012

Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. This disparity reflects both lower wages at entry and lower wage growth. Using linked employer-employee data, we show that 40 percent of the native-immigrant wage gap is explained by differential sorting across establishments. Our findings point to differences in job mobility and intermittent spells of unemployment as major sources of the discrepancy in lifetime wages. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. This pattern is consistent with statistical discrimination in hiring but not with monopsonistic discrimination due to informational frictions. *We are grateful for helpful comments from seminar and conference participants at

2012

We review research on the impact of immigration on income distribution. We discuss routes through which immigration can affect income distribution in the host and source countries, including compositional effects and effects on native incomes. Immigration may affect the composition of skills among the residents of a country. Moreover, immigrants can, by changing relative factor supplies, affect native wage and employment rates and the return to capital. We then provide evidence on the level and recent increases in immigration to OECD countries and on the distribution of native and immigrant educational attainment. We next provide a decomposition of 1979-2009 changes in US wage inequality, highlighting the effects of immigration on workforce composition. We then consider the economic theory of the impact of immigration on income distribution, emphasizing labor market substitution and complementarity between natives and immigrants. Further, by changing job opportunities or child care availability, immigrants can affect family, as well as individual, income distribution. We review research methodologies used to estimate the impact of immigration on the native income distribution. These include the structural approach (estimating substitution and complementarity among factors of production, including capital and labor force groups) as well as the natural experiment approach (seeking exogenous sources of variation in immigration) to studying the labor market. We then discuss evidence on these questions

2011

This study compares the outcomes of male foreign workers from different East and West European countries who entered the German labour market between 1995 and 2000, with those of male German workers. We find that the immigrant-native wage gap differs significantly between nationalities: the differential is largest for workers from Poland (-44 percent) and the Czech Republic (-38 percent) and by far the lowest for Spaniards (-8 percent). Results from an Oaxaca/Blinder type decomposition show that unfavourable characteristics (compared with German workers) contribute significantly to the explanation of the immigrant wage gap. This is especially true for workers from Poland, Portugal, Italy and Slovakia. For all other countries, it is observed that the coefficients effect dominates. It can therefore be concluded, that immigrants are generally affected by "discrimination". Comparing the effects for workers from East European EU member countries with those for other nationality groups, it emerges that East Europeans are not worse off than other nationalities. The most pronounced "discrimination" is found for immigrants from non-EU states in Eastern Europe. To analyse the importance of segregation into sectors, we take a closer look at construction and hotels & restaurants and find that the coefficients effect still adds most to the explanation of the raw wage differential between foreigners and Germans. This indicates that segregation into sectors does not significantly contribute to the "discrimination" of foreigners. Additional information is obtained from quantile decompositions. Coefficient effects (in absolute values) decrease for the majority of countries. Thus, discrimination appears to be more pronounced at low wage levels. Moreover, this evidence suggests sticky floors rather than glass ceilings.

Economics Letters, 1995

In this paper we study earnings determination at the firm level in Austria. We distinguish firms who employ immigrant workers and those who do not. By using a switching regressions model we find that native workers in firms with immigrant employees face rising earnings-tenure profiles whereas natives in other firms do not.