Immigrant Wage Profiles within and between Firms
Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. Using linked employer-employee data, we show that 40 percent of the native-immigrant wage gap is explained by differential sorting across establishments. Our findings show that returns to experience and seniority are similar for immigrant and native workers, but that differences in job mobility and intermittent spells of unemployment are major sources of disparity in lifetime wage growth. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. These empirical patterns are consistent with signaling disadvantages of immigrant job seekers, but not with the explanation that low wages follow from inferior information about employers and job opportunities.
Barth, Erling, Bernt Bratsberg, and Oddbjørn Raaum