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Why Are the Relative Wages of Immigrants Declining? A Distributional Approach

Author

Listed:
  • Brahim Boudarbat
  • Thomas Lemieux

    (Brahim Boudarbat is Associate Professor, École de relations industrielles, Université de Montréal. Thomas Lemieux is Professor at the Vancouver School of Economics, University of British Columbia.)

Abstract
The authors show that the decline in the relative wages of immigrants in Canada is far from homogeneous across the wage distribution. The well-documented decline in the mean wage gap between immigrants and Canadian-born workers hides a much larger decline at the low end of the wage distribution, while the gap hardly changed at the top end of the distribution. Using standard OLS regressions and unconditional quantile regressions, the authors show that both the changes in the mean wage gap and in the gap at different quantiles are well explained by standard factors such as experience, education, and country of origin of immigrants. Interestingly, an important source of change in the wages of immigrants relative to the Canadian born is the aging of the baby boom generation, which has resulted in a relative increase in the labor market experience, and thus in the wages, of Canadian-born workers relative to immigrants.

Suggested Citation

  • Brahim Boudarbat & Thomas Lemieux, 2014. "Why Are the Relative Wages of Immigrants Declining? A Distributional Approach," ILR Review, Cornell University, ILR School, vol. 67(4), pages 1127-1165, October.
    • Handle: RePEc:sae:ilrrev:v:67:y:2014:i:4:p:1127-1165
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    References listed on IDEAS

    as
    1. David Gray & Jeffrey Mills & Sourushe Zandvakili, 2003. "Immigration, Assimilation and Inequality of Income Distribution in Canada," University of Cincinnati, Economics Working Papers Series 2003-01, University of Cincinnati, Department of Economics.
    2. George J. Borjas, 2021. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 2, pages 3-29, World Scientific Publishing Co. Pte. Ltd..
    3. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    4. Kristin F. Butcher & John Dinardo, 2002. "The Immigrant and Native-Born Wage Distributions: Evidence from United States Censuses," ILR Review, Cornell University, ILR School, vol. 56(1), pages 97-121, October.
    5. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mehtap Akguc & Ana Ferrer, 2015. "Educational Attainment and Labor Market Performance: An Analysis of Immigrants in France," Working Papers 1505, University of Waterloo, Department of Economics, revised Feb 2015.
    2. Carl Lin, 2016. "How Do Immigrants From Taiwan Fare In The U.S. Labor Market?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-38, December.
    3. John S. Heywood & Daniel Parent, 2012. "Performance Pay and the White-Black Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 249-290.
    4. Brahim Boudarbat & Marie Connolly, 2013. "The gender wage gap among recent post‐secondary graduates in Canada: a distributional approach," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(3), pages 1037-1065, August.
    5. David A. Green & Christopher Worswick, 2017. "Canadian economics research on immigration through the lens of theories of justice," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1262-1303, December.
    6. Teresa Ghilarducci & Michael Papadopoulos & Siavash Radpour, 2017. "Relative Wages in Aging America: The Baby Boomer Effect," SCEPA working paper series. 2017-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    7. Wielandt, Hanna, 2015. "Employment polarization and immigrant employment opportunities," SFB 649 Discussion Papers 2015-025, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    8. Eva Moreno‐Galbis & Jeremy Tanguy & Ahmed Tritah & Catherine Laffineur, 2019. "Immigrants’ Wage Performance in a Routine Biased Technological Change Era: France 1994–2012," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(4), pages 623-673, October.
    9. Fang, Tony & Gunderson, Morley & Lin, Carl, 2016. "The use and impact of job search procedures by migrant workers in China," China Economic Review, Elsevier, vol. 37(C), pages 154-165.
    10. repec:hum:wpaper:sfb649dp2015-025 is not listed on IDEAS
    11. Anna Rosso, 2016. "Skill Transferability and Immigrant-Native Wage Gaps," Development Working Papers 405, Centro Studi Luca d'Agliano, University of Milano, revised 21 Oct 2016.
    12. Abbott, Michael G. & Beach, Charles M., 2013. "Earnings Mobility of Canadian Immigrants: A Transition Matrix Approach," CLSSRN working papers clsrn_admin-2013-47, Vancouver School of Economics, revised 27 Oct 2013.
    13. Rienzo, Cinzia, 2008. "Residual Wage Inequality and Immigration in the UK and the US," MPRA Paper 30279, University Library of Munich, Germany, revised Mar 2011.
    14. Brenzel, Hanna & Laible, Marie-Christine, 2016. "Does personality matter? : the impact of the big five on the migrant and gender wage gaps," IAB-Discussion Paper 201626, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Michael D. Smith & Dennis Wesselbaum, 2023. "Well-Being and Income Across Space and Time: Evidence from One Million Households," Journal of Happiness Studies, Springer, vol. 24(5), pages 1813-1840, June.
    16. Cinzia Rienzo, 2014. "Residual Wage Inequality and Immigration in the USA and the UK," LABOUR, CEIS, vol. 28(3), pages 288-308, September.

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    More about this item

    Keywords

    immigrant; wage distribution; unconditional quantile regression; Canada;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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