Wages of Skilled Migrant and Native Employees in Germany: New Light on an Old Issue

The German Council of Economic Experts (GCEE) argues for a labor market-driven immigration of skilled migrants into Germany to overcome a decline in workforce due to demographic ageing. We pick up this current debate on skilled immigration by analyzing the migrant-native wage differential for skilled workers in Germany and consider various information on firms. Our results indicate that the wage gap is mainly explained by observable characteristics, especially labor market experience and firm characteristics. However, we find lower rewards for migrants’ labor market experience than for natives (flatter experience curves). Our results show that these differences in experience curves become negligible in the long run. Moreover, we reveal firms’ wage-setting policies: Firms evaluate a worker's education independent of migration backgrounds, as migrants possess the same productivity levels as their German counterparts in the same occupations and task levels. Due to Germany's heterogeneous immigration structure, we are able to compare the results for different migrant subgroups and, thus, derive valuable insights into the migrant-native wage structure with a wide reach beyond Germany. This article adds to current debates in various industrialized countries with demographic ageing patterns, as it focuses on an important group for domestic labor markets: skilled immigrants.

The Effect of Americanization on the Earnings of Foreign-born Men

The earnings of foreign-born adult white men, as reported in the 1970 Census of Population, are analyzed through comparisons with the native born and among the foreign born by country of origin, years in the United States, and citizenship. Differences in the effects of schooling and postschool training are explored. Although immigrants initially earn less than the native born, their earnings rise more rapidly with U.S. labor market experience, and after 10 to 15 years their earnings equal, and then exceed, those of the native born. Earnings are unrelated to whether the foreign born are U.S. citizens.