The Immigrant Wage Gap and Assimilation in Australia: Does Unobserved Heterogeneity Matter?

32 Pages Posted: 18 Oct 2013

See all articles by Robert V. Breunig

Robert V. Breunig

Australian National University (ANU) - Crawford School of Public Policy

Syed Hasan

Massey University - School of Economics and Finance

Mosfegus Salehin

Australian National University (ANU)

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2013

Abstract

Immigrants to Australia are selected on observable characteristics. They may also differ from natives on unobservable characteristics such as ambition or motivation. If we account for unobservable differences, we find a wage gap for immigrant men from English speaking backgrounds, in contrast with previous research which has found no wage gap. Controlling for unobserved heterogeneity also seems important for finding cohort effects. Immigrants that arrived before 1985 faced a larger wage gap compared to native-born Australians than subsequent cohorts. Confirming other research, we find wage gaps for immigrant men and women from non-English speaking backgrounds. Wage assimilation occurs slowly for all groups, but is slowest for those from non-English speaking backgrounds.

Keywords: immigrants, wage gap, assimilation, Australia, cohort effects

JEL Classification: J31, J61

Suggested Citation

Breunig, Robert V. and Hasan, Syed and Salehin, Mosfegus, The Immigrant Wage Gap and Assimilation in Australia: Does Unobserved Heterogeneity Matter? (October 1, 2013). Crawford School SPI Working Paper 02/2013. Available at SSRN: https://ssrn.com/abstract=2342027 or http://dx.doi.org/10.2139/ssrn.2342027

Robert V. Breunig (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia
61261252148 (Phone)

HOME PAGE: http://https://crawford.anu.edu.au/crawford_people/content/staff/rbreunig.php

Syed Hasan

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North, 30974
New Zealand

Mosfegus Salehin

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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