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The Immigrant-Native Wage Gap in Germany

Author

Listed:
  • Aldashev Alisher

    () (Kazakh-British Technical University in Almaty, Tole Bi Str. 59, Almaty 050000, Kazakhstan)

  • Gernandt Johannes

    () (CEO of the German Engineering Federation (VDMA), Lyoner Straße 18, 60528 Frankfurt a.M., Germany)

  • Thomsen Stephan L.

    () (Applied Economic Policy, Leibniz University of Hannover, Director of Lower Saxony Institute for Economic Research (NIW), and Research Associate at ZEW Mannheim. Adress: Königstrasse 53, 30175 Hannover, Germany)

Abstract

Immigrant-native wage differentials are observed in many countries, so in Germany. However, the available empirical literature for Germany defined the groups in consideration, immigrants and natives, by citizenship. This limits the explanatory power of the estimates since citizenship distinguishes foreigners and German nationals, but assigns naturalised immigrants (including the large group of ethnic Germans) to the latter group. Providing a more adequate definition based on the concept of origin we analyse the immigrant-native wage gap. Based on data from the German Socio-Economic Panel Study,we decompose the wage gap between native Germans, foreigners, and naturalised immigrants, and consider further subgroups in the analysis. In the literature, time of residence has been proven to be a relevant determinant of immigrants’ wages. For the natives, time of residence is perfectly collinear with age, and unequal sets of variables have to be considered.We therefore suggest an extension of the Oaxaca-Blinder decomposition technique. Our results show a substantial gap in earnings for all immigrants’ groups compared to natives. Discarding immigrants who completed education abroad reduces much of the immigrants’ wage gap. Hence, educational attainment in Germany is an important component of economic integration of immigrants, and degrees obtained abroad are valued less.

Suggested Citation

  • Aldashev Alisher & Gernandt Johannes & Thomsen Stephan L., 2012. "The Immigrant-Native Wage Gap in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(5), pages 490-517, October.
  • Handle: RePEc:jns:jbstat:v:232:y:2012:i:5:p:490-517
    DOI: 10.1515/jbnst-2012-0502
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    References listed on IDEAS

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    Cited by:

    1. Ingwersen, Kai & Thomsen, Stephan L, 2019. "The Immigrant-Native Wage Gap in Germany Revisited," Hannover Economic Papers (HEP) dp-653, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. Christl, Michael & Köppl-Turyna, Monika & Gnan, Phillipp, 2017. "Wage Differences Between Immigrants and Natives in Austria: The Role of Literacy Skills," GLO Discussion Paper Series 145, Global Labor Organization (GLO).
    3. Carl Lin, 2016. "How Do Immigrants From Taiwan Fare In The U.S. Labor Market?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-38, December.
    4. repec:zbw:rwirep:0536 is not listed on IDEAS
    5. Verena Dill, 2013. "Ethnic Concentration and Extreme Right-Wing Voting Behavior in West Germany," Research Papers in Economics 2013-02, University of Trier, Department of Economics.
    6. Ralf Werner Koßmann, 2016. "Effectiveness of Social Capital in the Job Search Process," SOEPpapers on Multidisciplinary Panel Data Research 823, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Oliver Himmler & Robert Jäckle, 2018. "Literacy and the Migrant–Native Wage Gap," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 592-625, September.
    8. Brunow, Stephan & Jost, Oskar, 2019. "Wages of migrant and native employees in Germany: new light on an old issue," IAB Discussion Paper 201910, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Polyakova, Evgeniya & Smirnykh, Larisa, 2016. "The earning differential between natives and individuals with immigrant background in Russia: The role of ethnicity," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 43, pages 52-72.
    10. Ingwersen, Kai & Thomsen, Stephan L., 2020. "An Empirical Assessment of Workload and Migrants' Health in Germany," IZA Discussion Papers 13962, Institute of Labor Economics (IZA).
    11. Smirnykh, L. & Polaykova, E., 2020. "Income and the integration of migrants in the Russian labour market," Journal of the New Economic Association, New Economic Association, vol. 47(3), pages 84-104.
    12. Humpert, Stephan, 2013. "The immigrant-native pay gap in Germany," MPRA Paper 50413, University Library of Munich, Germany.
    13. Armando J. Garcia Pires, 2015. "Brain Drain And Brain Waste," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 1-34, March.
    14. Brenzel, Hanna & Reichelt, Malte, 2015. "Job mobility as a new explanation for the immigrant-native wage gap : a longitudinal analysis for the German labor market," IAB Discussion Paper 201512, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Vakulenko, Elena & Leukhin, Roman, 2017. "Wage discrimination against foreign workers in Russia," Russian Journal of Economics, Elsevier, vol. 3(1), pages 83-100.
    16. Brenzel, Hanna & Laible, Marie-Christine, 2016. "Does personality matter? : the impact of the big five on the migrant and gender wage gaps," IAB Discussion Paper 201626, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Friederike von Haaren-Giebel & Malte Sandner, 2016. "Naturalisation and on-the-job training: evidence from first-generation immigrants in Germany," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-28, December.

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