Immigrant–native pay gap driven by lack of access to high-paying jobs

Immigrants to high-income countries often face considerable and persisting labor market difficulties upon arrival, yet their native-born children often experience economic progress. Little is known about the degree to which immigrant–native earnings differences reflect unequal pay when doing the same work for the same employer versus differential sorting into lower-paid jobs and broader labor market segregation. Using linked employer–employee data from nine European and North American countries, we document that sorting of immigrant-background workers into lower-paying jobs on average accounts for about four-fifths of immigrant–native earnings differences. However, within-job pay inequality remains consequential in several countries. These findings highlight the centrality of policies aimed at reducing between-job immigrant–native segregation, but also the relevance of policies ensuring equal pay for equal work.