Wage discrimination against immigrants: measurement with firm-level productivity data

Abstract

This paper is one of the first to use employer-employee data on wages and labor productivity to measure discrimination against immigrants. We build on an identification strategy proposed by Bartolucci (Ind Labor Relat Rev 67(4):1166-1202, 2014) and address firm fixed effects and endogeneity issues through a diff GMM-IV estimator. Our models also test for gender-based discrimination. Empirical results for Belgium suggest significant wage discrimination against women and (to a lesser extent) against immigrants. We find no evidence for double discrimination against female immigrants. Institutional factors such as firm-level collective bargaining and smaller firm sizes are found to attenuate wage discrimination against foreigners, but not against women.JEL Classification: J15, J16, J24, J31, J7

Wage discrimination based on the country of birth: do tenure and product market competition matter?

“…To our knowledge, the most recent method, built by Bartolucci (2014), consists in estimating a wage equation at the firm level, including the percentage of hours worked by migrants, added value as a direct measure of productivity, and several control variables. Using this technique, Bartolucci (2014) and Kampelmann and Rycx (2016) find evidence of ethnic wage discrimination in Germany against workers born in another country and in Belgium against workers born outside EU15 countries, respectively. However, in both studies, a substantial heterogeneity within each group of migrant workers is likely to hide discrepancies in wage discrimination depending on the migrants' countries of birth.…”

L’union fait la force? Evidence for wage discrimination in firms with high diversity

“…However, the opposite view also emerges in the literature. Trade unions could prioritize the exclusive interests of native workers, especially in situations and periods in which foreigners are not affiliated to trade union organizations, as it was in the 1960s and 1970s in West Germany, where trade unions openly defended the interests of German workers against wage demands of the foreign Gastarbeiters (Kampelmann, 2011).…”

“…For instance, their presence could reflect the employer's "preference" to pay discriminatory wages to foreigners with weaker bargaining power (as hypothesized by Bloomekatz, 2007). In some cases, the discrimination against foreigners can also be incorporated into collectively negotiated pay scales, for instance, when job categories in which foreigners are overrepresented are specifically designed to allow for wage discrimination (Kampelmann, 2011).…”

“…Another robustness test concerns the impact of methodological choices related to the aggregation of individual HDIs into a firm-level indicator of diversity. As summarized in Kampelmann (2016), methodological choices underlying such aggregation can impact the numerical values of diversity indicators. In addition to the use of average Euclidean distances on which we based the regression results above, we re-estimate all the regressions using an alternative indicator of diversity, namely the standard deviation of HDIs within each firm.…”

“…The most common categories in which non-random sorting/segregation occurs include job types, tasks, occupational nomenclatures, firms with different technologies or capital endowments, and sectors of activity. As summarized by Kampelmann and Rycx (2016), whereas productivityrelated effects refer to differences between natives and foreigners within the same category (e.g., unequal productivity within the same occupation), sorting/segregation effects point to differences in the distribution of natives and foreigners across different categories that each capture a certain level of productivity (e.g., overrepresentation of foreigners in occupations characterized by lower productivity).…”