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Mind the Gap: A Detailed Picture of the Immigrant-Native Earnings Gap in the UK Using Longitudinal Data Between 1978 and 2006

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  • Lemos, Sara

    ()
    (University of Leicester)

Abstract

Using the underexplored, sizeable and long Lifetime Labour Market Database (LLMDB) we estimated the immigrant-native earnings gap across the entire earnings distribution, across continents of nationality and across cohorts of arrival in the UK between 1978 and 2006. We exploited the longitudinal nature of our data to separate the effect of observed and unobserved individual characteristics on earnings. This helped us to prevent selectivity biases such as cohort bias and survivor bias, which have been long standing unresolved identification issues in the literature. In keeping with the limited existing UK literature, we found a clear and wide dividing line between whites and non-whites in simple comparable models. However, in our more complete models we found a much narrower and subtler dividing line. This confirms the importance of accounting for unobservable individual characteristics, which is an important contribution of this paper. It also suggests that the labour market primarily rewards individual characteristics other than immigration status. We also found that the lowest paid immigrants, whom are disproportionately non-white, suffer an earnings penalty in the labour market, whereas higher paid immigrants, whom are disproportionately white, do not. Finally, we found less favourable earning gaps for cohorts that witnessed proportionately larger non-white and lower paid white immigration.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6058.

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Length: 42 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6058

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Keywords: earnings-gap; earnings; wages; immigration; UK;

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  1. Barry R. Chiswick & Anh T. Le & Paul W. Miller, 2008. "How Immigrants Fare across the Earnings Distribution in Australia and the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(3), pages 353-373, April.
  2. Kalena E. Cortes, 2004. "Are Refugees Different from Economic Immigrants? Some Empirical Evidence on the Heterogeneity of Immigrant Groups in the United States," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 465-480, May.
  3. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2006. "The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain," CEP Discussion Papers dp0754, Centre for Economic Performance, LSE.
  4. Alicia Adsera & Barry Chiswick, 2007. "Are there gender and country of origin differences in immigrant labor market outcomes across European destinations?," Journal of Population Economics, Springer, Springer, vol. 20(3), pages 495-526, July.
  5. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 474-75, June.
  6. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(4), pages 1335-1374, November.
  7. Sara Lemos, 2011. "Immigrant Economic Assimilation: Evidence from UK Longitudinal Data between 1978 and 2006," Discussion Papers in Economics 11/39, Department of Economics, University of Leicester, revised Oct 2011.
  8. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 3(4), pages 463-89, October.
  9. Bell, Brian D, 1997. "The Performance of Immigrants in the United Kingdom: Evidence from the GHS," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(441), pages 333-44, March.
  10. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 19(1), pages 22-64, January.
  11. Barry R. Chiswick & Yew Liang Lee & Paul W. Miller, 2005. "Immigrant Earnings: A Longitudinal Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 485-503, December.
  12. Christian Dustmann & Francesca Fabbri & Ian Preston, 2005. "The Impact of Immigration on the British Labour Market," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(507), pages F324-F341, November.
  13. George J. Borjas, 1994. "Assimilation and Changes in Cohort Quality Revisited: What Happened to Immigrant Earnings in the 1980s?," NBER Working Papers 4866, National Bureau of Economic Research, Inc.
  14. Kristin F. Butcher & John DiNardo, 2002. "The Immigrant and native-born wage distributions: Evidence from United States censuses," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 97-121, October.
  15. Carliner, Geoffrey, 1980. "Wages, Earnings and Hours of First, Second, and Third Generation American Males," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 18(1), pages 87-102, January.
  16. Harriet Duleep & Mark Regets, 1997. "Measuring immigrant wage growth using matched CPS files," Demography, Springer, Springer, vol. 34(2), pages 239-249, May.
  17. Chiswick, Barry R, 1980. "The Earnings of White and Coloured Male Immigrants in Britain," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 47(185), pages 81-87, February.
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