IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Wage differentials between native, immigrant and cross-border workers: Evidence and model comparisons

  • VAN KERM Philippe
  • YU Seunghee
  • CHOE Chung

This paper exploits a parametric variant of the Machado-Mata simulation methodology to examine wage distribution differences between native and foreign workers in Luxembourg. Relying on ?parametric quantile regression? in place of repeated linear quantile regressions cuts computing time drastically with no loss in the accuracy of unconditional quantile simulations. Substantively, we find a clear inverted-U-shaped native worker advantage: the advantage is small (possibly negative) for both low and high quantiles, but it is large for the middle half of the quantile range (between the 20th and 70th native wage percentiles). The pattern holds against both immigrants and cross-border workers, although the latter catch up much less at high percentiles. Differences in human capital and job characteristics hardly account for the gap, unlike sorting into different jobs and occupations which account for a substantial share?although not all?of the gap.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://www.liser.lu/publi_viewer.cfm?tmp=2518
Download Restriction: no

Paper provided by LISER in its series LISER Working Paper Series with number 2014-05.

as
in new window

Length: 60 pages
Date of creation: May 2014
Date of revision:
Handle: RePEc:irs:cepswp:2014-05
Contact details of provider: Postal:
11, Porte des Sciences, L-4366 Esch-sur-Alzette, G.-D. Luxembourg

Phone: 00352 / 58 58 55 - 1
Fax: 00352 / 58 58 55 - 700
Web page: https://www.liser.lu

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Victor Chernozhukov & Ivan Fernandez-Val & Blaise Melly, 2013. "Inference on counterfactual distributions," CeMMAP working papers CWP17/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. Angela Noufaily & M. C. Jones, 2013. "Parametric quantile regression based on the generalized gamma distribution," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 62(5), pages 723-740, November.
  3. Hipólito Simón & Esteban Sanromá & Raúl Ramos, 2008. "Labour segregation and immigrant and native-born wage distributions in Spain: an analysis using matched employer–employee data," Spanish Economic Review, Springer;Spanish Economic Association, vol. 10(2), pages 135-168, June.
  4. Alicia Adsera & Barry Chiswick, 2007. "Are there gender and country of origin differences in immigrant labor market outcomes across European destinations?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(3), pages 495-526, July.
  5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  6. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising Wage Inequality, the Decline of Collective Bargaining, and the Gender Wage Gap," IZA Discussion Papers 4911, Institute for the Study of Labor (IZA).
  7. Abdurrahman Aydemir & Mikal Skuterud, 2008. "The Immigrant Wage Differential within and across Establishments," ILR Review, Cornell University, ILR School, vol. 61(3), pages 334-352, April.
  8. Jenkins, Stephen P. & Van Kerm, Philippe, 2004. "Accounting for income distribution trends: A density function decomposition approach," IRISS Working Paper Series 2004-07, IRISS at CEPS/INSTEAD.
  9. Frank Cowell & Emmanuel Flachaire & Sanghamitra Bandyopadhyay, 2009. "Goodness-of-fit: an economic approach," LSE Research Online Documents on Economics 25433, London School of Economics and Political Science, LSE Library.
  10. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  11. SOLOGON Denisa & VAN KERM Philippe, 2014. "Earnings dynamics, foreign workers and the stability of inequality trends in Luxembourg 1988-2009," LISER Working Paper Series 2014-03, LISER.
  12. Rothe, Christoph, 2011. "Partial Distributional Policy Effects," IZA Discussion Papers 6076, Institute for the Study of Labor (IZA).
  13. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  14. Claeskens,Gerda & Hjort,Nils Lid, 2008. "Model Selection and Model Averaging," Cambridge Books, Cambridge University Press, number 9780521852258, December.
  15. Robert J. R. Elliott & Joanne K. Lindley, 2008. "Immigrant wage differentials, ethnicity and occupational segregation," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 645-671.
  16. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
  17. SErgio Firpo & Nicole M. Fortin & Thomas Lemieux, 2006. "Unconditional Quantile Regressions," Textos para discussão 533, Department of Economics PUC-Rio (Brazil).
  18. Jim Albrecht & Aico van Vuuren & Susan Vroman, 2007. "Counterfactual Distributions with Sample Selection Adjustments: Econometric Theory and an Application to the Netherlands," Working Papers gueconwpa~07-07-06, Georgetown University, Department of Economics.
  19. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
  20. CHOE Chung & VAN KERM Philippe, 2014. "Foreign workers and the wage distribution: Where do they fit in?," LISER Working Paper Series 2014-02, LISER.
  21. Van Kerm, Philippe, 2009. "Generalized measures of wage differentials," IRISS Working Paper Series 2009-08, IRISS at CEPS/INSTEAD.
  22. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
  23. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," NBER Working Papers 11628, National Bureau of Economic Research, Inc.
  24. Nicole Fortin & Thomas Lemieux & Sergio Firpo, 2010. "Decomposition Methods in Economics," NBER Working Papers 16045, National Bureau of Economic Research, Inc.
  25. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  26. Louis N. Christofides & Alexandros Polycarpou & Konstantinos Vrachimis, 2013. "Gender Wage Gaps, ‘Sticky Floors’ and ‘Glass Ceilings’ in Europe," University of Cyprus Working Papers in Economics 02-2013, University of Cyprus Department of Economics.
  27. Albrecht, James & Björklund, Anders & Vroman, Susan, 2001. "Is There a Glass Ceiling in Sweden?," IZA Discussion Papers 282, Institute for the Study of Labor (IZA).
  28. Kristin F. Butcher & John DiNardo, 1998. "The Immigrant and Native-born Wage Distributions: Evidence from United States Censuses," NBER Working Papers 6630, National Bureau of Economic Research, Inc.
  29. Robert Barsky & John Bound & Kerwin Charles & Joseph Lupton, 2001. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," NBER Working Papers 8466, National Bureau of Economic Research, Inc.
  30. Claudia PIGINI, 2012. "Of Butterflies and Caterpillars: Bivariate Normality in the Sample Selection Model," Working Papers 377, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  31. Manuel Landajo & Javier de Andrés & Pedro Lorca, 2008. "Measuring firm performance by using linear and non-parametric quantile regressions," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 57(2), pages 227-250.
  32. repec:hal:journl:halshs-00176029 is not listed on IDEAS
  33. Barry R. Chiswick & Anh T. Le & Paul W. Miller, 2008. "How Immigrants Fare across the Earnings Distribution in Australia and the United States," ILR Review, Cornell University, ILR School, vol. 61(3), pages 353-373, April.
  34. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  35. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  36. Priscillia Hunt, 2012. "From the bottom to the top: a more complete picture of the immigrant-native wage gap in Britain," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-18, December.
  37. BROSIUS Jacques & RAY Jean-Claude & VERHEYDEN Bertrand & WILLIAMS Donald R., 2014. "Wage differentials between natives and cross-border workers within and across establishments," LISER Working Paper Series 2014-04, LISER.
  38. McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, vol. 52(3), pages 647-63, May.
  39. Lixin Cai & Amy Y.C. Liu, 2012. "Wage Differentials between Immigrants and the Native-Born in Australia," Crawford School Research Papers 1212, Crawford School of Public Policy, The Australian National University.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:irs:cepswp:2014-05. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Library and Documentation)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.