 Native-Immigrant Wage Differentials in Germany - Assimilation, Discrimination, or Human Capital?Günter Lang () No 197, Discussion Paper Series from Universitaet Augsburg, Institute for Economics Abstract: This study uses the concept of stochastic frontiers for analyzing the income disparity between ethnic groups in West Germany. Estimation of a potential rather than an average earnings function increases the explanatory power of the human capital approach and allows for detecting discrimination as well as assimilation processes. The empirical results im-ply that the human capital gap explains more than 75% of the wage differential between natives and foreign nationalities in Germany. As for ethnic Germans migrants, their wage disparity can be explained by 50% with human capital differentials. Surprisingly, only small differences could be observed with regard to the question of earnings efficiency. On an average, inhabitants as well as immigrants transformed about 85% to 90% of their potential income into actual earnings. The sources for the individually diverging efficiency ratios are not well understood, with discrimination only found for ethnic Germans from Eastern Europe. Somewhat disappointing, the assimilation hypothesis was clearly rejected for all migrants with again the exception being ethnic Germans from Eastern Europe. JEL-codes: J31 J61 J71 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:aug:augsbe:0197 Access Statistics for this paper More papers in Discussion Paper Series from Universitaet Augsburg, Institute for Economics Universitaetsstrasse 16, D-86159 Augsburg, Germany. Contact information at EDIRC. |
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