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The Composition of Wage Differentials between Migrants and Natives

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  • Panagiotis Nanos
  • Christian Schluter

Abstract

We consider the role of unobservables, such as differences in search frictions, reservation wages, and productivities for the explanation of wage differentials between migrants and natives. We disentangle these by estimating an empirical general equilibrium search model with on-the-job search due to Bontemps, Robin, and van den Berg (1999) on segments of the labour market defined by occupation, age, and nationality using a large scale German administrative dataset. The native-migrant wage differential is then decomposed into several parts, and we focus especially on the component that we label "migrant effect", being the difference in wage offers between natives and migrants in the same occupation-age segment in firms of the same productivity. Counterfactual decompositions of wage differentials allow us to identify and quantify their drivers, thus explaining within a common framework what is often labelled the unexplained wage gap.

Suggested Citation

  • Panagiotis Nanos & Christian Schluter, 2013. "The Composition of Wage Differentials between Migrants and Natives," Papers 1306.1781, arXiv.org, revised Oct 2013.
    • Handle: RePEc:arx:papers:1306.1781
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Zainab Iftikhar & Anna Zaharieva, 2019. "General equilibrium effects of immigration in Germany: Search and matching approach," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 245-276, January.
    2. repec:iab:iabdpa:201910 is not listed on IDEAS
    3. Moreno-Galbis, Eva & Tritah, Ahmed, 2016. "The effects of immigration in frictional labor markets: Theory and empirical evidence from EU countries," European Economic Review, Elsevier, vol. 84(C), pages 76-98.
    4. Gürtzgen, Nicole & Blömer, Maximilian & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard, 2016. "Estimating an Equilibrium Job Search Model for the German Labour Market," Annual Conference 2016 (Augsburg): Demographic Change 145950, Verein für Socialpolitik / German Economic Association.
    5. repec:red:issued:18-263 is not listed on IDEAS
    6. Blömer, Maximilian J. & Guertzgen, Nicole & Pohlan, Laura & Stichnoth, Holger & van den Berg, Gerard J., 2018. "Unemployment effects of the German minimum wage in an equilibrium job search model," ZEW Discussion Papers 18-032, ZEW - Leibniz Centre for European Economic Research.
    7. Fays, Valentine & Mahy, Benoît & Rycx, Francois & Volral, Mélanie, 2019. "Wage Discrimination Based on the Country of Birth: Do Tenure and Product Market Competition Matter?," IZA Discussion Papers 12706, Institute of Labor Economics (IZA).
    8. Matteo Cacciatore & Giuseppe Fiori & Nora Traum, 2020. "Hours and Employment Over the Business Cycle: A Structural Analysis," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 240-262, January.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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