The Immigrant-Native Wage Gap in Germany Revisited

48 Pages Posted: 10 Jun 2019 Last revised: 16 Apr 2023

See all articles by Kai Ingwersen

Kai Ingwersen

Leibniz Universität Hannover

Stephan L. Thomsen

Leibniz Universität Hannover - Institute of Economics; IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department

Abstract

This study provides new evidence on the levels of economic integration experienced by foreigners and naturalised immigrants relative to native Germans from 1994 to 2015. We decompose the wage gap using the method for unconditional quantile regression models by employing a regression of the (recentered) influence function (RIF) of the gross hourly wage on a rich set of explanatory variables. This approach enables us to estimate contributions made across the whole wage distribution. To allow for a detailed characterization of labour market conditions, we consider a comprehensive set of socio-economic and labour-related aspects capturing influences of, e.g., human capital quality, cultural background, and the personalities of immigrants. The decomposition results clearly indicate a significant growing gap with higher wages for both foreigners (13.6 to 17.6 %) and naturalised immigrants (10.0 to 16.4 %). The findings further display a low explanation for the wage gap in low wage deciles that is even more pronounced within immigrant subgroups. Cultural and economic distances each have a significant influence on wages. A different appreciation of foreign educational qualifications, however, widens the wage gap substantially by 4.5 ppts on average. Moreover, we observe an indication of deterioration of immigrants’ human capital endowments over time relative to those of native Germans.

Keywords: Germany, wage gap, immigration, unconditional quantile regression

JEL Classification: J61, J31, J15

Suggested Citation

Ingwersen, Kai and Thomsen, Stephan Lothar, The Immigrant-Native Wage Gap in Germany Revisited. IZA Discussion Paper No. 12358, Available at SSRN: https://ssrn.com/abstract=3401126 or http://dx.doi.org/10.2139/ssrn.3401126

Kai Ingwersen (Contact Author)

Leibniz Universität Hannover

Welfengarten 1
D-30167 Hannover, 30167
Germany

Stephan Lothar Thomsen

Leibniz Universität Hannover - Institute of Economics ( email )

United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

ZEW – Leibniz Centre for European Economic Research - Labour Markets, Human Resources and Social Policy Department ( email )

P.O.Box 10 34 43
D-68034
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
137
Abstract Views
726
Rank
379,079
PlumX Metrics