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The Composition of Wage Differentials between Migrants and Natives

  • Panagiotis Nanos
  • Christian Schluter

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.

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File URL: http://arxiv.org/pdf/1306.1781
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Paper provided by arXiv.org in its series Papers with number 1306.1781.

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Date of creation: Jun 2013
Date of revision: Oct 2013
Handle: RePEc:arx:papers:1306.1781
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  15. Bergemann, Annette & Caliendo, Marco & van den Berg, Gerard J & Zimmermann, Klaus F, 2011. "The Threat Effect of Participation in Active Labor Market Programs on Job Search Behavior of Migrants in Germany," CEPR Discussion Papers 8295, C.E.P.R. Discussion Papers.
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  31. repec:dgr:uvatin:1998089 is not listed on IDEAS
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