Immigrant Occupational Composition and the Earnings of Immigrants and Natives in Germany: Sorting or Devaluation?

In this article, the influence of immigrant occupational composition on the earnings of immigrants and natives in Germany is examined. Using data from the German Socio‐Economic Panel Study and the German Microcensus, several relevant concepts are tested. The notion of quality sorting states that the differences in wages that are associated with the immigrant share within occupations are due only to differences in qualification requirements. Cultural devaluation assumes a negative influence over and above that of quality sorting. The findings indicate that both processes are at work. Additional analyses reveal that the impact of immigrant occupational composition is largely restricted to white‐collar occupations, which underlines the importance of considering historical differences between occupation types in classic migration destinations such as Germany.