Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany

This paper investigates the transferability of human capital from various countries to Germany and the contribution of imperfect human capital portability to the explanation of the immigrant‐native wage gap. Our results reveal that, overall, education and, in particular, labor market experience accumulated in the home countries of the immigrants receive significantly lower returns than human capital obtained in Germany. We further find evidence for heterogeneity in the returns to human capital of immigrants across countries. Finally, imperfect human capital transferability appears to be a major factor in explaining the wage differential between natives and immigrants.     

Unequal Opportunities for Young People with Immigrant Backgrounds in the Swedish Labour Market

Abstract. This paper investigates labour‐market performance for ‘young people with immigrant backgrounds’ and those ‘born in Sweden with native‐born parents’ in the Swedish labour market. It focuses on young people who were aged 18–20 during 1990, and their labour‐market status after 8 years, in 1998. The results indicate that young people of immigrant descent have lower annual wage income and are at higher risk of not being employed than those born in Sweden with native‐born parents. Differences in human capital characteristics cannot explain these results. Other theories, which stress the effect of discriminatory behaviour and the power of social network composition, are discussed as alternative interpretations. Having one native‐born parent is considered to be important to labour market success. However, having a native‐born father rather than a native‐born mother is associated with better labour‐market achievement.     

Wage Differentials between Ethnic Groups in Switzerland

This paper analyses the average wage differentials between various groups of immigrants and the Swiss workers. Classical Oaxaca‐Blinder decompositions are applied to a sample of 7,494 males (whose 1,070 immigrants) interviewed for the 1995 Swiss Labour Force Survey. Education and experience before and after migration are separately considered in two different ways. We control for sample selection in the wage and salary sector. We also investigate earnings differentials between natives and immigrants who arrived in the country before the age of 6. Our main results are that the part of differentials due to difference in coefficient varies strongly with different ethnic groups considered, that education is a strong determinant of the difference in observed characteristics and that second generation immigrants are fairly well assimilated in the Swiss labour market.     

Wage Discrimination Against Immigrants in Austria?

This paper analyses wage discrimination against immigrants in Austria using combined information from the labour force surveys and administrative social security data. We find that immigrants experience a wage penalty of 15 percentage points compared with natives. However, a substantial part of this gap can be explained by differences in human capital endowment and job position. Decomposition methods using quantile regressions indicate larger discrimination in the upper part of the wage distribution.     

The Early‐career Gender Wage Gap among University Graduates in the Finnish Private Sector

In the Finnish private sector, the gender wage gap increases significantly during the first 10 years after labour market entry, accounting for most of the lifetime increase in the gender wage differentials. This paper investigates the reasons for this gender difference in early‐career wage development. By focusing on university graduates the paper considers several explanations based on the human capital theory, job mobility, and labour market segregation. The results suggest that only about 20–26 per cent of the average early‐career gender wage gap is explained by gender differences in experience, the field of education, employer characteristics, and mobility. A substantial unexplained gap thus remains. Of the investigated factors gender differences in the field of education and work experience matter most.     

Testing for Statistical Discrimination: The Case of Immigrant Physicians in Israel

Two models have been proposed to explain why two groups of workers who have the same level of productivity can receive different wages: (i) the statistical discrimination model, according to which the discrimination is the result of a rational response to uncertainty about productivity that consists in adopting certain characteristics as proxies for productivity and (ii) the taste‐based discrimination model, according to which the discrimination is based on prejudice against a particular group. It is usually difficult to determine empirically whether the gap in earnings is due to statistical or taste‐based discrimination. However, the conditions for a natural experiment were created in 1989 when Israel introduced a licensing examination for immigrant physicians arriving from that point onward, thus making it possible to determine which type of discrimination is responsible for the wage gap between immigrant and native physicians. Controlling for other factors, the paper finds that: (1) the earnings of physicians who immigrated to Israel after 1989 are significantly higher than those of physicians who immigrated previously and (2) the earnings of immigrant physicians who have taken the licensing examination converge to those of native physicians after an average of 5.5 years. These results constitute evidence that the difference in earnings between native and immigrant physicians is due to statistical, rather than taste‐based, discrimination.     

Comparisons in Gender Wage Differentials and Discrimination between Germany and the United Kingdom

Due to the lack of consistent data, direct and robust comparisons of cross‐country labour markets have been virtually impossible. This study uses a new panel data series that controls for inconsistencies, thus overcoming this problem. This study estimates gender wage differentials and gender discrimination in the German and UK labour markets. Panel estimates are used to identify general wage differences between the two countries, with cross‐sectional comparisons undertaken to identify changes that have occurred between 1991 and 1993, that are consistent with known labour market policies. It is found that gender wage differentials are greater in the UK than Germany with employer discrimination against females attributed with the majority of the difference in both countries.     

Do the Falling Earnings of Immigrants Apply to Self‐employed Immigrants?

It is well known that the earnings of recent cohorts of immigrant men have fallen further behind native‐born men. Using several years of Canadian Census data, this study finds that immigrants have turned to self‐employment at a much faster rate than the native born. In addition, the earnings gap between self‐employed immigrant and native‐born men has not grown with successive cohorts, but rather has followed a cyclical movement: narrowing at the peak, and widening in times of weaker economic activity. However, immigrants choosing self‐employment still face challenges, as their earnings are far below native‐born earnings, and convergence is a lengthy process.     

Immigrants' Relative Earnings in Sweden — A Cohort Analysis

Abstract. This paper examines the earnings assimilation of immigrants in Sweden by applying a quantile regression approach on pooled data during the period 1990–99. Immigrants from Nordic and Western European countries have a smaller entry earnings disadvantage and slower rate of assimilation than other groups of immigrants. For some cohorts of immigrants from European countries the initial earnings disadvantage disappears after 15–20 years in Sweden, but as non‐European immigrants suffered from very large entry earnings disadvantages, their earnings will not catch up with the earnings of natives during their first 20 years in Sweden. More recent non‐European immigrant cohorts had a larger entry earnings disadvantage than previous ones. The immigration policy, discrimination, and the economic conditions may have contributed to the decline in the earnings assimilation of non‐European immigrants.     

Effect of a Family Policy Reform on Immigrants' Labour Supply and Earnings

An important feature of Scandinavian welfare states is the transfer of resources to families with children. Long parental leave and provision of high‐quality subsidized day care are important policies in this regard. This paper evaluates the impact of a recent Norwegian family policy reform on the labour supply of native and immigrant women in Norway. The reform provides cash benefits to families with 1–3‐year‐old children who do not utilize state‐subsidized day care centres. We find that the effect of the reform on labour force participation of women is fairly modest. However, given participation, earnings of natives and immigrants fell after the cash‐benefit reform. Specifically, earnings of highly educated non‐Western immigrants fell by more than those of natives.     

Male–Female Labour Market Participation and Wage Differentials in Greece

This paper is an empirical study of the development of labour market participation and wage differentials between males and females in Greece between 1988 and 1994. There is little known about the position of women in the Greek labour market. This paper uses survey data generated by the Greek National Statistical Service. The decision to engage in paid employment and the resulting remuneration are studied using selectivity–corrected earnings estimations. Oaxaca and Ransom decompositions and counterfactual analysis show that the adverse treatment of female labour market participation is the largest identifiable reason why the wage gap is there and why it increased between 1988 and 1994.     

Do Immigrants Compete with Natives?

The paper analyses the impact of foreign workers on the Italian labour market. We address the issue of whether immigrants from less developed countries are complementary or substitutes to domestic workers. We construct a data set on immigrant workers from the Administrative Social Security Archive which starts in 1986, before the general amnesty of 1990–91, when a large share of illegal immigrants were granted working permits, and end in 1995. A two-stage procedure devised by Moulton is applied to yearly cross-sections of wages by industry and region. Our results show that the inflow of immigrants raises the wages of native manual workers (i.e. it has a complementary effect), and this effect is larger in small firms and in the north of the country. We postulate that the positive impact on native wages is due to the existence of labour constraints on the side of firms. Firms are unable to expand their output because they cannot find native workers who are willing to undertake certain (typically low-skilled) jobs. Immigrants help to fill this gap. This view is reinforced by the fact that over a ‘crucial threshold’ of the share of foreign work (7.7–12 percent) additional inflows in the labour market of foreign work have a negative effect on native wages (i.e. they compete with natives).     

Trade and Factor Market Reforms in China

The benefits of the multi‐faceted liberalization of the Chinese economy can be seen in various indicators of economic development. The rate of growth of the economy, the flow of foreign investment in China, and rising quality of life are some of the indicators of gains from the liberalization process. Most of the research has focused on the role of trade reforms on the Chinese economy. There is, however, one unfinished agenda that has not been addressed adequately by policy makers as well as academia, i.e. labor‐sector reforms. In this paper, we analyze the effect of labor market liberalization in China using a Computable General Equilibrium (CGE) model. Most CGE models on China using a neoclassical approach assume that there is a single wage rate for the economy. This is a simplifying assumption and has strong implications. Studies show that inter‐industry wage differentials persist even after accounting for obvious explanations such as differences in human capital or job hazard. Inter‐industry structural rigidities in developing countries lead to wage differentials. In China, labor mobility from the rural to the urban sector is restricted. Furthermore, China is on its way to joining the WTO agreement. As a signatory to the WTO agreement, China would be required to reform its trade sector by eliminating tariffs. In this paper, we explicitly model wage differentials in the case of the Chinese economy. Various counterfactual experiments have been conducted to introduce efficiency by the removal of factor market differentials in China in the presence and absence of tariff and non‐tariff barriers. Our results indicate that factor market reforms are essential to the realization of full gains from accession to the WTO agreement.     

Public-Private Wage Differentials in French-Speaking Africa: A Comparative Analysis

Abstract. In the framework of structural adjustment programs implemented in Africa, the idea that wages in the public sector are too high compared to those of the private sector is partly based on wage policies with regard to the public sector. But the existence of public-wage differentials, inducing a labour market segmentation within the modern sector, has rarely been the object of attentive examination. With the help of earnings functions, based on homogeneous cross-section and logitudinal data of seven capitals of French-speaking Africa, the author plans to verify this hypothesis. The main conclusion of this research is that distortions on the modern labour market of many African countries are less important than one may think. In most of the countries considered, public-private wage gaps are essentially attributable to characteristics of individuals. This suggests that policies aiming to reduce wages of the public sector are no longer justifiable, economically and socially.     

Is There a Double‐Negative Effect? Gender and Ethnic Wage Differentials in Italy

This paper investigates the gender and ethnic wage differentials for female migrants in Italy by applying the Oaxaca–Blinder decomposition, with and without Heckman correction, to account for self‐selection into the labour market. The gender wage gap is nearly 15 per cent, more than 60 per cent of which is unexplained by observable differences. The ethnic wage gap is much larger (39 per cent), but endowments explain 53 per cent of the gap. We also estimate the double‐negative effect of being both female and a migrant. A female migrant earns 42 per cent less than an Italian male; the unexplained component is estimated to be 53–65 per cent. Results are robust to different specifications.     

Discriminatory Barriers and the Gender Wage Gap in France

Abstract. In this paper, we propose a method of decomposition that identifies the wage effect of the gender discriminatory barriers in the allocation of grades and full‐time jobs. Standard decomposition techniques tend to interpret the explained portion as a non‐discriminatory component, though discriminatory barriers in the labour market also affect the characteristics of individuals. Using survey data generated by INSEE in France in 2000, we find some evidence that the gender discriminatory barriers within the French labour market explain much of the difference between men and women's attainment and full‐time employment. Our method substantially changes the traditional empirical conclusions since the discriminatory barriers in the allocation of grades and full‐time jobs account for one quarter of the gender monthly wage gap. When adding to the pure wage discrimination portion, we thus show that half of the gender monthly wage gap is not explained.     

The Gender Wage Gap in the Turkish Labor Market

Abstract. This paper examines the sources of the gender wage gap in the Turkish labor market by using matched employer–employee data and the standard wage regression estimations as well as the Oaxaca decomposition method. The extensive number of variables in the data set enables a thorough quantitative analysis of the role of various individual‐ as well as firm‐related factors leading to wage differentials between men and women, namely human capital endowments including job tenure, occupational and industrial segregation, private/public sector location, coverage of the workplace under collective labor bargaining, and firm size. It also examines the extent of gender‐based industry and occupational segregation within the confines of data set and computes the Duncan & Duncan segregation index. We find that a large portion of the gender wage gap is attributable to women's considerably lower levels of work experience and job tenure. Other important variables that lead to pay differentials are women's lower concentration in jobs covered by collective labor bargaining and a substantial degree of occupational and industrial segregation. The differential rates of return to many of the wage determinant variables are also found to be significant in the formation of the gender wage gap.     

The East German Wage Structure in the Transition to a Market Economy

ABSTRACT: An important question for the development of the East German labour market in the transition to a market economy is whether wage differentials by qualification, industry or region (which were relatively small in the former GDR) adjust to those in market economies which are more in line with differences in productivities and economic conditions. We estimate empirical earnings functions to quantify the contribution of various important factors shaping the earnings distribution in the East German transition process. Estimation is based on the first six waves of the Labour Market Monitor which is a representative panel data set of the East German working-age population covering the period 1990 to 1992. The specification of the estimated earnings functions is motivated by the various hypotheses of the development of the East German wage structure in the transformation process. Although we find some similarities with the existing wage structure in West Germany, the East German wage structure still differs in some important dimensions.     

Determinants of Foreign Workers’ Wages in Two Italian Regions with High Illegal Immigration

Since the end of the 1970s Italy has moved from being an out-migration country to being a foreign immigration country, but very few studies have addressed the factors determining the wages of immigrant workers, owing to the lack of available data. In this paper we analyse the determinants of the wages of immigrants in some areas of Latium and Campania, where the share of illegal immigration is relatively high, using the results of a set of sample surveys which collected information on several aspects of the immigration process in the years 1993–94. The purpose of the article is to shed some light on the factors underlying wage distribution among the immigrants using an estimation method that controls for sample selection problems. According to the empirical results, income differences seem to be relatively high among immigrants. Differences in labour market integration among sexes and area of origin clearly emerge from the results. Moreover, legal status plays an important role in the explanation of the wage gap between documented and undocumented immigrants, also because of the different occupational sector structure in the two groups.