Immigrant-Native Wage Gaps over Two Generations: Does the Field of Study Matter?

Although a growing number of studies highlight the moderating role of educational attainment on the wage differential between immigrants and natives, the influence of the field of study remains largely unexplored. We aim to fill this gap by drawing on detailed, matched employer-employee data on workers holding a master’s degree in Belgium for the period 1999-2016. After controlling for a wide range of covariates, our regression analyses show that the wage gap between immigrant and native workers with degrees in higher-paying fields (i.e. STEM and LEM) narrows considerably over two generations, but remains significant. By contrast, among workers with degrees in lower-paying fields (i.e. Other Social Sciences, Education, Services, Arts and Humanities) the wage gap between immigrants and natives disappears within two generations. Furthermore, our wage decompositions reveal that immigrant graduates are somewhat more likely to hold degrees in higher-paying fields than natives, which results in a small positive quantity effect. However, they also show that wage returns associated with fields of study are significantly lower for immigrants than for natives. This leads to a negative price effect, which, in percentage points, is halved over two generations. Altogether, the combined price and quantity effects – with the former far outweighing the latter – account for between 28 and 37% of the overall pay gap between natives and first- and second-generation immigrants, respectively. Sensitivity tests using a more detailed classification of fields of study further refine our results.