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Endowment or Discrimination? An Analysis of Immigrant–Native Earnings Differentials in Switzerland

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  • Stefan M. Golder
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    Abstract

    Recent studies have shown that there are significant earnings differentials between immigrants and natives in Switzerland. The goal of this paper is to determine whether these differences can be attributed to diverging socio-economic endowments or to discrimination. We use the well-known econometric technique, developed by Oaxaca (1973) and Blinder (1973), to determine the extent of discrimination. As data on earnings are available only for employed, we adopt a two-stage Heckman procedure to correct for sample-selection bias. Our analysis is based on data from the 1995 wave of the Swiss Labor Force Survey (SLFS). The decomposition of the earnings differential reveals that the discrimination effect plays a more important role in the explanation of the earnings differential than the endowment effect.

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    File URL: https://www.ifw-members.ifw-kiel.de/publications/endowment-or-discrimination-an-analysis-of-immigrant-native-earnings-differentials-in-switzerland/kap967.pdf
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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 967.

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    Length: 26 pages
    Date of creation: Mar 2000
    Date of revision:
    Handle: RePEc:kie:kieliw:967

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    1. Golder, Stefan M. & Straubhaar, Thomas, 1998. "Migration to Switzerland: Some New Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1791, C.E.P.R. Discussion Papers.
    2. Dolton, P J & Makepeace, G H, 1986. "Sample Selection and Male-Female Earnings Differentials in the Graduate Labour Market," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 317-41, July.
    3. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
    4. Andreas Diekmann & Henriette Engelhardt, 1995. "Einkommensungleichheit zwischen Frauen und Männern. Eine ökonometrische Analyse der Schweizer Arbeitskräfteerhebung," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 131(I), pages 57-83, March.
    5. Puhani, Patrick A., 1997. "Foul or Fair?," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 97-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Peter Kugler, 1988. "Lohndiskriminierung in der Schweiz: Evidenz von Mikrodaten," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 124(I), pages 23-47, March.
    7. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
    8. Dorothe Bonjour & Michael Gerfin, 1995. "Einkommensungleichheit zwischen Frauen und Männern. Eine ökonomische Analyse der Schweizer Arbeitskräfteerhebung: Kommentar," Diskussionsschriften, Universitaet Bern, Departement Volkswirtschaft dp9503, Universitaet Bern, Departement Volkswirtschaft.
    9. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
    10. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    11. Velling, Johannes, 1995. "Wage discrimination and occupational segregation of foreign male workers in Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 95-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. 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.
    13. Nielsen, H.S., 1998. "Two Notes of Discrimination and Decomposition," Papers, Centre for Labour Market and Social Research, Danmark- 98-01, Centre for Labour Market and Social Research, Danmark-.
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