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Understanding the Native-Immigrant Wage Gap Using Matched Employer-Employee Data. Evidence from Germany

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  • Cristian Bartolucci

Abstract

Hellerstein and Neumark (1999) developed a straightforward method to detect wage discrimination using matched employer-employee data. In this paper a new method to measure wage discrimination is proposed, that builds on the ideas first developed by Hellerstein and Neumark. It has four main advantages: it is robust to labor market segregation, it does not impose linearity on the wage setting equation, it avoids the problematic estimation of production functions, and it is not only a test for discrimination but also produces measures of discrimination. Using matched employer-employee data from Germany, I find that immigrants are being discriminated against. They receive wages which are 13 percent lower than native workers in the same firm.

Suggested Citation

  • Cristian Bartolucci, 2010. "Understanding the Native-Immigrant Wage Gap Using Matched Employer-Employee Data. Evidence from Germany," Carlo Alberto Notebooks 150, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:150
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    1. Stefan Bender & Julia Lane & Kathryn Shaw & Fredrik Andersson & Till von Wachter, 2008. "The Analysis of Firms and Employees: Quantitative and Qualitative Approaches," NBER Books, National Bureau of Economic Research, Inc, number bend08-1, March.
    2. Lopez-Acevedo, Gladys & Tinajero, Monica & Rubio, Marcela, 2005. "Mexico : human capital effects on wages and productivity," Policy Research Working Paper Series 3791, The World Bank.
    3. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-333, April.
    4. Dong, Xiao-yuan & Zhang, Liqin, 2009. "Economic transition and gender differentials in wages and productivity: Evidence from Chinese manufacturing enterprises," Journal of Development Economics, Elsevier, vol. 88(1), pages 144-156, January.
    5. Johannes Van Biesebroeck, 2008. "Wage and Productivity Premiums in Sub-Saharan Africa," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 345-371, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Stephan Kampelmann & François Rycx, 2016. "Wage discrimination against immigrants: measurement with firm-level productivity data," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-24, December.
    2. Elena Grinza & Stephan Kampelmann & François Rycx, 2020. "L’union fait la force? Evidence for wage discrimination in firms with high diversity," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(2), pages 181-211, June.
    3. Nanos, Panagiotis & Schluter, Christian, 2014. "The composition of wage differentials between migrants and natives," European Economic Review, Elsevier, vol. 65(C), pages 23-44.
    4. Rycx, François & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, Institute of Labor Economics (IZA).
    5. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    6. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    7. 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).
    8. 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.
    9. 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.
    10. Humpert, Stephan, 2013. "The immigrant-native pay gap in Germany," MPRA Paper 50413, University Library of Munich, Germany.
    11. 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.

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    More about this item

    Keywords

    Labor market discrimination; immigration; matched employer-employee data;
    All these keywords.

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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