Qualifications, Discrimination, or Assimilation? An Extended Framework for Analysing Immigrant Wage Gaps

Abstract

In this paper, we analyze immigrant wage gaps and propose an extension of the traditional wage decomposition technique, which is a synthesis from two strains of literature on ethnic/immigrant wage differences, namely the "assimilation literature" and the "discrimination literature". We estimate separate wage equations for natives and a number of immigrant groups using panel data sample selection models. Based on the estimations, we find that the immigrant wage gap is caused by a lack of qualifications and incomplete assimilation, and that a large fraction of that gap would disappear if only immigrants could find employment and thus accumulate work experience.

Keywords: Wage Assimilation, Immigrants, Wage Gap, Panel Data Sample Selection Model

JEL Classification: J15, J16, J31, J71