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Mind the Gap: What Gap? A Detailed Picture of the Immigrant-Native Earnings Gap in the UK using Longitudinal Data between 1978 and 2006

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  • Sara Lemos

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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 Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/38.

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Date of creation: Sep 2011
Date of revision: Oct 2011
Handle: RePEc:lec:leecon:11/38

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

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References

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  1. George J. Borjas & Richard B. Freeman, 1992. "Immigration and the Workforce: Economic Consequences for the United States and Source Areas," NBER Books, National Bureau of Economic Research, Inc, number borj92-1, May.
  2. 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.
  3. Christian Dustmann & Francesca Fabbri, 2005. "Immigrants in the British labour market," Fiscal Studies, Institute for Fiscal Studies, vol. 26(4), pages 423-470, December.
  4. Bell, Brian D, 1997. "The Performance of Immigrants in the United Kingdom: Evidence from the GHS," Economic Journal, Royal Economic Society, vol. 107(441), pages 333-44, March.
  5. Adsera, Alicia & Chiswick, Barry R., 2004. "Are There Gender and Country of Origin Differences in Immigrant Labor Market Outcomes across European Destinations?," IZA Discussion Papers 1432, Institute for the Study of Labor (IZA).
  6. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  7. Harriet Duleep & Mark Regets, 1997. "Measuring immigrant wage growth using matched CPS files," Demography, Springer, vol. 34(2), pages 239-249, May.
  8. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2006. "The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain," CReAM Discussion Paper Series 0608, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  9. Carliner, Geoffrey, 1980. "Wages, Earnings and Hours of First, Second, and Third Generation American Males," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 87-102, January.
  10. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
  11. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  12. 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.
  13. 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.
  14. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  15. 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.
  16. Chiswick, Barry R, 1980. "The Earnings of White and Coloured Male Immigrants in Britain," Economica, London School of Economics and Political Science, vol. 47(185), pages 81-87, February.
  17. Lemos, Sara, 2013. "Immigrant economic assimilation: Evidence from UK longitudinal data between 1978 and 2006," Labour Economics, Elsevier, vol. 24(C), pages 339-353.
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