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Wage differentials between natives and cross-border workers within and across establishments

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  • BROSIUS Jacques
  • RAY Jean-Claude
  • VERHEYDEN Bertrand
  • WILLIAMS Donald R.

Abstract

Luxembourg has a very unusual labor market, with only 29% of Luxembourgish nationals. The remaining workforce is composed of immigrants (27%) and cross- border workers (44%) who live in one of the three surrounding countries which are France, Germany and Belgium. Research on economic outcomes of immigrants has been a major focus of labor market research in many countries, but the cross-border population has only attracted scarce attention. Even though this topic is of limited relevance in most countries at the national level, similar situations as in Luxembourg can be found in regional and local labor markets in most other countries, around ma- jor cities for example. In this paper we use the example of Luxembourg to investi- gate the determinants of the wage gap between natives and cross-border workers. We first analyze whether this specific commuting workforce is concerned, like the non na- tional population in many other labor markets, by segregation into low-wage firms. We then use a matched employer-employee dataset to investigate the role that firm-specific characteristics play in determining the wage gap. This approach opens interesting per- spectives for expanding the literature on the native-immigrants wage gap.

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Bibliographic Info

Paper provided by CEPS/INSTEAD in its series CEPS/INSTEAD Working Paper Series with number 2014-04.

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Length: 20 pages
Date of creation: May 2014
Date of revision:
Handle: RePEc:irs:cepswp:2014-04

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Keywords: wage gap; cross-border labor market; segregation; multilevel modeling;

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References

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  1. Kimberly Bayard & Judith Hellerstein & David Neumark & Kenneth Troske, 2003. "New Evidence on Sex Segregation and Sex Differences in Wages from Matched Employee-Employer Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 21(4), pages 887-922, October.
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  14. Françis KRAMARZ & Francis KRAMARZ & Louis-Paul PELÉ, 1996. "Wage Inequalities and Firm-Specific Compensation policies in France," Annales d'Economie et de Statistique, ENSAE, issue 41-42, pages 369-386.
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  16. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
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