Immigrant-Native Wage Differences in Hungary: Sorting into High-Paying Workplaces

Immigrants’ economic integration remains one of the most debated aspects of international migration, as they often experience persistent employment and wage disadvantages compared to natives. We provide the first large-scale evidence on immigrant pay gaps in Hungary (and more generally from Central Eastern Europe) based on administrative matched employer–employee data. Contrary to the pattern documented in Western Europe and North America, most immigrant groups in Hungary earn more than native-born workers on average. We show that this advantage is largely explained by sorting: immigrants are disproportionately employed in higher-paying firms and higher-paying occupation–firm cells, rather than receiving higher pay than natives for the same job in the same workplace. Within-job pay differences are close to zero for transborder Hungarians (ethnic Hungarians born abroad) and remain small but positive for other immigrant groups. These results suggest that immigrant wage differentials in Hungary reflect employer demand and selective recruitment into relatively well-paying segments of the labor market, rather than systematic under or overpayment. Decomposition results (based on the AKM literature) reinforce our interpretation: immigrant–native wage differentials in Hungary are driven mainly by between-job sorting along skill composition and firm and occupation pay premia, not within-job pay inequality.