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Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal?
September 2018
Abstract: This paper draws upon influence function regression methods to determine where foreign workers stand in the distribution of private sector wages in Luxembourg, and assess whether and how much their wages contribute to wage inequality. This is quantified by measuring the effect that a marginal increase in the proportion of foreign workers—foreign residents or cross-border workers—would have on selected quantiles and measures of inequality. Analysis of the 2006 Structure of Earnings Survey reveals that foreign workers have generally lower wages than natives and therefore tend to haul the overall wage distribution downwards. Yet, their influence on wage inequality reveals small and negative. All impacts are further muted when accounting for human capital and, especially, job characteristics. Not observing any large positive inequality contribution on the Luxembourg labour market is a striking result given the sheer size of the foreign workforce and its polarization at both ends of the skill distribution.
| Type: | Journal article |
| Theme(s): | Wages and employment Migration and integration Income inequality: measures, trends and drivers |
| Keywords: | cross-border workers, immigrant wages, influence function, Luxembourg, RIF regression, wage inequality |
| JEL Classification: | J15, J31, J61 |
| 10.3390/econometrics6030041 | |
| RePEc:gam:jecnmx:v:6:y:2018:i:3:p:41-:d:168315 |
Reference
Choe, C. & Van Kerm, P. (2018), 'Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal?', Econometrics, 6(3), 1-26.
@ARTICLE{pvk-462,
Author = {Choe, Chung and Van Kerm, Philippe},
Title = {Foreign Workers and the Wage Distribution: {W}hat Does the Influence Function Reveal?},
Journal = {Econometrics},
Volume = {6},
Number = {3},
Pages = {1-26},
Month = sep,
Year = {2018}
}Download links
Permanent link and QR code
Other versions
Choe, C. & Van Kerm, P. (2014), 'Foreign workers and the wage distribution: Where do they fit in?', LISER Working Paper 2014-02, Luxembourg Institute of Socio-Economic Research, Esch/Alzette, Luxembourg.
Funding
Information and wage inequality (INWIN) supported by the Fonds National de la Recherche
Other papers in the same project
None.
Presentation(s) of this work (PVK only)
Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal?. EALE 30th Annual Conference, Lyon, 2018.
Foreign Workers and the Wage Distribution: Where Do They Fit In?. ECINEQ 2017, New York, 2017.
Foreign Workers and the Wage Distribution: Where Do They Fit In?. ISER Monday Seminar Series, Colchester, 2017.
Foreign Workers and the Wage Distribution: Where Do They Fit In?. 3rd Luxembourg Workshop on Household Finance and Consumption, Luxembourg, 2015.
Dataset(s) used in the paper
Other papers using the same datasets...
Van Kerm, P., Choe, C. & Yu, S. (2016), 'Decomposing quantile wage gaps: a conditional likelihood approach', Journal of the Royal Statistical Society (Series C: Applied Statistics), 65(4), 507-527.
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