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

Qualifications, Discrimination, or Assimilation? An Extended Framework for Analysing Immigrant Wage Gaps 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. JEL Classification: J15, J16, J31, J71