Mind the Gap: A Detailed Picture of the Immigrant-Native Earnings Gap in the UK Using Longitudinal Data between 1978 and 2006

42 Pages Posted: 6 Nov 2011

See all articles by Sara Lemos

Sara Lemos

University of Leicester; IZA Institute of Labor Economics

Abstract

Using the underexplored, sizeable and long Lifetime Labour Market Database (LLMDB) we estimated the immigrant-native earnings gap across the entire earnings distribution, across continents of nationality and across cohorts of arrival in the UK between 1978 and 2006. We exploited the longitudinal nature of our data to separate the effect of observed and unobserved individual characteristics on earnings. This helped us to prevent selectivity biases such as cohort bias and survivor bias, which have been long standing unresolved identification issues in the literature. In keeping with the limited existing UK literature, we found a clear and wide dividing line between whites and non-whites in simple comparable models. However, in our more complete models we found a much narrower and subtler dividing line. This confirms the importance of accounting for unobservable individual characteristics, which is an important contribution of this paper. It also suggests that the labour market primarily rewards individual characteristics other than immigration status. We also found that the lowest paid immigrants, whom are disproportionately non-white, suffer an earnings penalty in the labour market, whereas higher paid immigrants, whom are disproportionately white, do not. Finally, we found less favourable earning gaps for cohorts that witnessed proportionately larger non-white and lower paid white immigration.

Keywords: immigration, wages, earnings, earnings-gap, UK

JEL Classification: J24, J31, J61, J71, J82, F22

Suggested Citation

Lemos, Sara, Mind the Gap: A Detailed Picture of the Immigrant-Native Earnings Gap in the UK Using Longitudinal Data between 1978 and 2006. IZA Discussion Paper No. 6058, Available at SSRN: https://ssrn.com/abstract=1955398 or http://dx.doi.org/10.2139/ssrn.1955398

Sara Lemos (Contact Author)

University of Leicester ( email )

University Road
Leicester LE1 7RH
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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