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The Effect of Host Society Culture on Migrant Wage Discrimination: Approaching the Roestigraben

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Abstract

This paper investigates whether host society culture affects migrant wage discrimination, i.e. whether migrant wage discrimination is more intense in host societies where culture is more inward-looking. The motivation for this investigation in the Swiss context stems from two stylized facts showing that (i) political preferences on issues related to migration, asylum and naturalization of foreigners are markedly more conservative in the German region and (ii) that average wage differences between migrants and natives are larger in the German region. Building on this, the paper begins with a comparison of returns to factors (for eight migrant groups compared to natives) using a human capital model of wage determination. It then performs an Oaxaca decomposition of wage differentials in order to compare its unexplained component across groups and regions. The last step consists in implementing a regression discontinuity design approach to establish whether host society culture is one of the determinants explaining differences in migrant wage discrimination across the language border. Results show returns to factors of wage-earning migrants are lower in the German region for a preponderant majority of migrant groups. The analysis of wage differentials and the associated unexplained parts also support the hypothesis that wage discrimination is more pronounced in this region of the Swiss labor market. Finally, results of the regression discontinuity design approach confirm that host society culture is one of the determinants of wage discrimination endured by migrants.

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Bibliographic Info

Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 08-2012.

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Length: 41 pages
Date of creation: 22 Apr 2012
Date of revision:
Handle: RePEc:gii:giihei:heidwp08-2012

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Keywords: immigration; migration; labour market; culture; political preferences; wage discrimination; Switzerland;

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  1. Neuman, Shoshana & Oaxaca, Ronald L, 2004. "Wage Differentials in the 1990s in Israel: Endowments, Discrimination and Selectivity," CEPR Discussion Papers 4709, C.E.P.R. Discussion Papers.
  2. Maria Sáez-Martí & Yves Zenou, 2007. "Cultural transmission and discrimination," IEW - Working Papers 348, Institute for Empirical Research in Economics - University of Zurich, revised Apr 2012.
  3. Klor, Esteban F & Shayo, Moses, 2007. "Social Identity and Preferences over Redistribution," CEPR Discussion Papers 6406, C.E.P.R. Discussion Papers.
  4. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  5. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Working Papers 13039, National Bureau of Economic Research, Inc.
  6. Robert Elliott & Joanne Kathryn Lindley, 2006. "Immigrant Wage Differentials, Ethnicity and Occupational Clustering," Working Papers 2006008, The University of Sheffield, Department of Economics, revised May 2006.
  7. Alfonso Sousa-Poza, 2004. "Is the Swiss Labor Market Segmented? An Analysis Using Alternative Approaches," LABOUR, CEIS, vol. 18(1), pages 131-161, 03.
  8. Chiswick, Barry R. & Le, Anh T. & Miller, Paul W., 2006. "How Immigrants Fare Across the Earnings Distribution: International Analyses," IZA Discussion Papers 2405, Institute for the Study of Labor (IZA).
  9. Beatrix Brügger & Rafael Lalive & Josef Zweimüller, 2009. "Does Culture Affect Unemployment? Evidence from the Röstigraben," NRN working papers 2009-10, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  10. Philipp Bauer & Regina Riphahn, 2007. "Heterogeneity in the intergenerational transmission of educational attainment: evidence from Switzerland on natives and second-generation immigrants," Journal of Population Economics, Springer, vol. 20(1), pages 121-148, February.
  11. Lindqvist, Erik, 2008. "Identity and Redistribution," Working Paper Series 735, Research Institute of Industrial Economics.
  12. Erik Lindqvist & Robert Östling, 2013. "Identity and redistribution," Public Choice, Springer, vol. 155(3), pages 469-491, June.
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