Wage Disparities across Immigrant Generations: Education, Segregation, or Unequal Pay?

Abstract

Immigrants and their native-born children often face considerable wage penalties relative to natives, but less is known about whether this inequality arises through differences in educational qualifications, segregation across occupations and establishments, or unequal pay for the same work. Using linked employer–employee data from Norway, the authors ask whether immigrant–native wage disparities 1) reflect differences in detailed educational qualifications, labor market segregation, or within-job pay differences; 2) differ by immigrant generation; and 3) vary across different segments of the labor market. They find that immigrant–native wage disparities primarily reflect sorting into lower-paying jobs, and that wage disadvantages are considerably reduced across immigrant generations. When doing the same work for the same employer, immigrant-background workers, especially children of immigrants, earn similar wages to natives. Sorting into jobs seems more meritocratic for university graduates, for professionals, and in the public sector, but within-job pay differences are strikingly similar across market segments.