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Wages of migrant and native employees in Germany: new light on an old issue

Author

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  • Brunow, Stephan

    (University of Applied Labour Studies)

  • Jost, Oskar

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"The German workforce is expected to decline in future and labour-oriented immigration should counteract labour shortages. Fair wages in Germany set incentives for foreigners to immigrate there. Therefore this paper aims to shed new light on the decomposition of the wage gap between foreign and native full-time employees. Using the Mincerian wage equation and the threefold Oaxaca-Blinder decomposition reveals that the wage gap is mostly explained by observable characteristics (endowments), especially location, labour market experience and firm characteristics. Productivity differences can be disregarded with the exception of labour market experience, as foreigners have much flatter experience profiles than native workers. This effect holds for several specifications and potential selectivity and vanishes for foreigners that have resided in Germany for at least ten years and naturalised foreigners. Our results lead to the conclusion that 'discrimination' is negligible from an economic point of view and foreigners receive equal pay." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Brunow, Stephan & Jost, Oskar, 2019. "Wages of migrant and native employees in Germany: new light on an old issue," IAB-Discussion Paper 201910, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201910
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    Cited by:

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    2. Ramona Schmid, 2023. "Migration and wage inequality: a detailed analysis for German metropolitan and non-metropolitan regions [Migration und Lohnungleichheit: Eine detaillierte Analyse für Deutsche Metropol- und Nicht-M," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(1), pages 147-201, April.
    3. Hammer, Luisa & Hertweck, Matthias Sebastian, 2022. "EU Enlargement and (Temporary) Migration: Effects on Labour Market Outcomes in Germany," VfS Annual Conference 2022 (Basel): Big Data in Economics 264082, Verein für Socialpolitik / German Economic Association.
    4. Héctor Alberto Botello-Peñaloza, 2021. "Wage Inequality of Venezuelan Migrants in Ecuador," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(1), pages 115-132, March.
    5. Schmid, Ramona, 2022. "Migration and wage inequality: A detailed analysis for German regions over time," Hohenheim Discussion Papers in Business, Economics and Social Sciences 04-2022, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    6. Brunow, Stephan & Jost, Oskar, 2020. "On the foreign to native wage differential in Germany: Does the home country matter?," IAB-Discussion Paper 202026, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    Bundesrepublik Deutschland ; ausländische Arbeitnehmer ; Einwanderer ; Inländer ; Integrierte Erwerbsbiografien ; Lohnhöhe ; Lohnunterschied ; 2015-2015;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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