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Wage discrimination based on the country of birth: do tenure and product market competition matter?

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  • Valentine Fays
  • Benoît Mahy
  • François Rycx
  • Mélanie Volral

Abstract

Using a merged employer-employee panel dataset of more than 13,000 firms relative to the Belgian private sector for the 1999–2010 period, this paper aims to quantify wage discrimination against migrant workers based on their countries of birth, with workers’ tenure and firm product market competition as moderating variables. To do so, we specify a wage-setting equation that includes a direct measure of worker productivity. We control for a wide range of worker and firm characteristics, as well as time-invariant unobserved heterogeneity in firms and potential endogeneity in the composition of the workforce. Our results show large disparities in wage discrimination against foreign-born migrants depending on their countries of birth. They also suggest that wage discrimination against migrants vanishes as their firm-specific labour market experience (i.e. tenure) increases and tends to disappear in highly competitive product market situations.

Suggested Citation

  • Valentine Fays & Benoît Mahy & François Rycx & Mélanie Volral, 2021. "Wage discrimination based on the country of birth: do tenure and product market competition matter?," Applied Economics, Taylor & Francis Journals, vol. 53(13), pages 1551-1571, March.
  • Handle: RePEc:taf:applec:v:53:y:2021:i:13:p:1551-1571
    DOI: 10.1080/00036846.2020.1838431
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    Cited by:

    1. Valentine Fays & Benoît Mahy & François Rycx, 2023. "Wage differences according to workers' origin: The role of working more upstream in GVCs," LABOUR, CEIS, vol. 37(2), pages 319-342, June.
    2. Valentine Jacobs & Kevin Pineda-Hernández & François Rycx & Mélanie Volral, 2023. "Does over-education raise productivity and wages equally? The moderating role of workers’ origin and immigrants’ background," Education Economics, Taylor & Francis Journals, vol. 31(6), pages 698-724, November.
    3. Andrej Cupák & Pavel Ciaian & d'Artis Kancs, 2021. "Comparing the immigrant-native pay gap: A novel evidence from home and host countries," EERI Research Paper Series EERI RP 2021/05, Economics and Econometrics Research Institute (EERI), Brussels.
    4. V. Jacobs & F. Rycx & M. Volral, 2022. "Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics," De Economist, Springer, vol. 170(4), pages 459-501, November.
    5. Valentine Jacobs, 2021. "Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics," DULBEA Working Papers 23562, ULB -- Universite Libre de Bruxelles.
    6. Kevin André Pineda-Hernández & François Rycx & Mélanie Volral, 2022. "Moving Up the Social Ladder? Wages of First- and Second-Generation Immigrants from Developing Countries," Working Papers CEB 22-012, ULB -- Universite Libre de Bruxelles.

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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