Wage differentials between native, immigrant and cross-border workers: Evidence and model comparisons

Philippe Van Kerm, Seunghee Yu and Chung Choe

No 2014-05, LISER Working Paper Series from Luxembourg Institute of Socio-Economic Research (LISER)

Abstract: This paper exploits a parametric variant of the Machado-Mata simulation methodology to examine wage distribution differences between native and foreign workers in Luxembourg. Relying on ‘parametric quantile regression’ in place of repeated linear quantile regressions cuts computing time drastically with no loss in the accuracy of unconditional quantile simulations. Substantively, we find a clear inverted-U-shaped native worker advantage: the advantage is small (possibly negative) for both low and high quantiles, but it is large for the middle half of the quantile range (between the 20th and 70th native wage percentiles). The pattern holds against both immigrants and cross-border workers, although the latter catch up much less at high percentiles. Differences in human capital and job characteristics hardly account for the gap, unlike sorting into different jobs and occupations which account for a substantial share—although not all—of the gap.

Keywords: immigrant wages; cross-border workers; quantile regression; quantile process; distribution regression; Singh.Maddala distribution; Dagum distribution; Luxembourg (search for similar items in EconPapers)
JEL-codes: J15 J31 J61 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2014-05
New Economics Papers: this item is included in nep-lab and nep-mig
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