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Immigrant–native wage gap in Europe: the role of cognitive skills and their use at work

Immigrant–native wage gap in Europe: the role of cognitive skills and their use at work The purpose of this paper is to address the role of cognitive skills and extent of skill use at work in explaining the immigrant–native wage gap in Europe. The study targets immigrant–native disparities in literacy and numeracy cognitive skills, as important, yet not exhaustive factor behind immigrants’ wage penalty.Design/methodology/approachThe research relies on the Program of International Assessment of Adult Competencies data for 15 European countries. The empirical analysis employs multivariate regression analysis and incorporates the full set of plausible values for each skill domain, to correctly measure cognitive skills. To estimate standard errors, the authors employ Jackknife replication methodology with 80 replication weights and final population weight.FindingsThe authors document that, on average, immigrants achieve substantially worse scores in literacy and numeracy test domains. Only highly educated immigrants tend to improve their skills over time in host countries. The results of wage gap analysis indicate that having cognitive skills, demographic profile and occupation category comparable to natives does not yield comparable wage rate. The remaining wage gap results from the systematic differences in skills application at work, as immigrants use their skills to lower extent, relative to natives.Originality/valueThe research employs a novel measure of productive human capital, which accounts for cognitive skills in literacy and numeracy domains, and frequencies of skill use at work. It allows to more precisely evaluate the immigrant–native disparity in human capital application and its reflection on the wage rate. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Immigrant–native wage gap in Europe: the role of cognitive skills and their use at work

International Journal of Manpower , Volume 40 (1): 22 – Mar 18, 2019

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References (40)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0143-7720
DOI
10.1108/ijm-03-2018-0087
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to address the role of cognitive skills and extent of skill use at work in explaining the immigrant–native wage gap in Europe. The study targets immigrant–native disparities in literacy and numeracy cognitive skills, as important, yet not exhaustive factor behind immigrants’ wage penalty.Design/methodology/approachThe research relies on the Program of International Assessment of Adult Competencies data for 15 European countries. The empirical analysis employs multivariate regression analysis and incorporates the full set of plausible values for each skill domain, to correctly measure cognitive skills. To estimate standard errors, the authors employ Jackknife replication methodology with 80 replication weights and final population weight.FindingsThe authors document that, on average, immigrants achieve substantially worse scores in literacy and numeracy test domains. Only highly educated immigrants tend to improve their skills over time in host countries. The results of wage gap analysis indicate that having cognitive skills, demographic profile and occupation category comparable to natives does not yield comparable wage rate. The remaining wage gap results from the systematic differences in skills application at work, as immigrants use their skills to lower extent, relative to natives.Originality/valueThe research employs a novel measure of productive human capital, which accounts for cognitive skills in literacy and numeracy domains, and frequencies of skill use at work. It allows to more precisely evaluate the immigrant–native disparity in human capital application and its reflection on the wage rate.

Journal

International Journal of ManpowerEmerald Publishing

Published: Mar 18, 2019

Keywords: Migration; Human capital; J15; J24; J31; J61

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