Jo Lindley _ Rob Elliott Immigrant Wage Differentials_ Ethnicity

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					Immigrant Wage Differentials,
 Ethnicity and Occupational
        Segregation.

     J. Lindley & R. Elliott

  Ethnic Differences in the Labour
      Market, 4th March 2008
             Background
• Observed average earnings are lower for
  minority ethnic groups compared to
  whites.
• Previous studies have suggested that this
  is partially a consequence of lower
  `quality’ education and poor socio-
  economic characteristics (younger age
  profiles etc).
• The residual `unexplained’ component has
  been attributed to ethnic discrimination
  and cultural differences. But also based on
  economic assimilation – Chiswick (1978).
           In this study…
• We revisit the earnings discrimination
  debate.
• Examine the role of the occupational
  segregation.
• How much of the `unexplained’ wage gap
  can be attributed to occupational
  segregation?
• How much of the observed occupational
  segregation is `unexplained’ and how much
  can be attributed to racial disadvantage?
                The Data.
• We use the QLFS 1993-2003.
• Real gross weekly earnings (but robust to
  hourly pay too).
• Full time male workers (age 23-65).
• Exclude the self-employed and immigrants
  that arrived in the UK before they left full
  time education.
• Use years of schooling to measure human
  capital.
    Table 1. Occupational Distribution by Immigrant Status (percent)

                                              Full Sample          Natives                                                 Immigrants a

                                                                     White         Non-white           White           All Non-          Black         South
                                                                                                                        white                          Asian

Professional occupations                              13               13              15                20                17              13           16

Managers and administrators                           20               20              18                23                12              9            12

Associate prof & tech occupations                     11               11              14                11                8               10            5



Craft and related occupations                         17               18              12                10                12              10           13

Personal, protective occupations                      6                 5               7                10                8               10            6

Sales occupations                                     4                 4               5                 3                3               2             3

Plant and machine operatives                          16               16              12                10                19              21           25

Clerical, secretarial occupations                     7                 7              12                 5                8               7             9

Other occupations                                     7                 7               6                 8                13              18           11

N                                                  151951            145276           1722              2588             2365             574          1098

                 Source: QLFS 1992-2003 male full time workers (age 23-65). a Immigrants that arrived in the UK after they left full time education.
                 These occupational groups are ranked by average pay.
Table 2. Mean Log Weekly Earnings by
  Occupation and Immigrant Status
                           Full         Natives                                     Immigrants a
                         sample
                                          White       Non-white      White      All Non-       Black         South
                                                                                 whites                      Asian
Professional                     6.02          6.02         5.96*       6.10*        6.11*           6.05       6.18*
occupations
                            [0.405]         (0.003)        (0.029)    (0.020)       (0.029)        (0.066)    (0.045)
Managers and                     5.99          5.99         5.89*       6.08*        5.84*          5.82*       5.84*
administrators
                            [0.472]         (0.003)        (0.027)    (0.021)       (0.037)        (0.091)    (0.052)
Associate prof & tech            5.85          5.85         5.76*       6.01*        5.79*           5.78        5.77
occupations
                            [0.414]         (0.003)        (0.027)    (0.027)       (0.026)        (0.047)    (0.050)
Craft and related                5.60          5.61          5.60        5.64        5.35*          5.44*       5.29*
occupations
                            [0.401]         (0.002)        (0.027)    (0.028)       (0.034)        (0.067)    (0.047)
Personal, protective             5.57          5.59         5.47*       5.47*        5.23*          5.39*       4.99*
occupations
                            [0.474]         (0.005)        (0.042)    (0.030)       (0.037)        (0.058)    (0.077)
Sales occupations                5.57          5.58         5.47*        5.52        5.18*          5.18*       5.15*
                            [0.488]         (0.007)        (0.059)    (0.065)       (0.058)        (0.141)    (0.096)
Plant and machine                5.51          5.51         5.44*        5.54        5.36*          5.42*       5.33*
operatives
                            [0.392]         (0.003)        (0.026)    (0.025)       (0.021)        (0.029)    (0.028)
Clerical, secretarial            5.48          5.48         5.40*       5.60*         5.47           5.46        5.45
occupations
                            [0.407]         (0.004)        (0.029)    (0.038)       (0.030)        (0.074)    (0.037)
Other occupations                5.34          5.34         5.38*        5.32        5.26*           5.31       5.20*
                            [0.393]         (0.004)        (0.039)    (0.032)       (0.027)        (0.044)    (0.045)
Total                            5.72          5.72         5.66*       5.81*        5.56*          5.55*        5.52
                            [0.484]          (0001)        (0.012)    (0.011)       (0.012)        (0.021)    (0.019)
N                       151951              145276           1722       2588          2365            574       1098
 Results: Occupational Attainment
• Most non-white natives and all immigrant groups
  experience an unexplained penalty in terms of
  attaining employment in the higher paid
  occupations (Professionals, Managers and
  Associate Professionals)

• South Asian immigrants are 25 percentage
  points more likely, whilst Black immigrants are 16
  percentage points more likely, to be employed in
  the lowest paid jobs (Plant/ Machine 7 Other
  jobs).
      Results: Wage Equations
• For Professionals: Significant penalties exist
  only for
  – Other NW migrants (0.10 lp’s)
  – Black migrants (0.12 lp’s)
  – No penalties for native born or white immigrants.
• Managers:
  – White migrants earn more (0.14 lp’s)
  – Black natives earn less (0.08 lp’s)
  – 3 non-white migrant groups earn less still (0.13 lp’s)
• Associate Profs:
  – White migrants earn more (0.15 lp’s)
  – Black natives earn less (0.17 lp’s)
  – 3 non-white migrant groups earn less (0.15 - 0.23 lp’s)
     Results: Wage Equations
• Plant/Machine & Clerical:
  – No penalty for white migrants
  – lower pay of black native born men (0.09 lp’s)
  – lower pay for S. Asians (0.14 lp’s)
  – lower pay for 3 non-white migrant groups
    (0.15 – 0.40 lp’s).
• Other Occupations: All migrants earn less
  – White migrants earn 0.15 lp’s less
  – Other non-white migrants earn 0.25 lp’s less
  – Black migrants earn 0.26 lp’s less
  – South Asian migrants earn 0.40 lps less.
     Table 3a. Mean Log Nominal Gross Weekly Earnings Decompositions
                    (White Natives are the base category).
                            Non-White     White          Non-White      Black        South
                             Natives      Immigrants     Immigrants     Immigrant    Asian
                                                                        s            Immigrant
                                                                                     s
Total Differential                0.064         -0.092         0.162         0.171        0.204
Coefficient                       0.094         0.014          0.344         0.323        0.396
Characteristic                   -0.030         -0.107         -0.183       -0.152       -0.192
Characteristic Components


Age                               0.054         0.014          -0.008       -0.001       -0.012
Schooling                        -0.104         -0.098         -0.121       -0.096       -0.117
Year                             -0.007         -0.002         -0.002       -0.003        0.000
Married                           0.034         0.001          -0.019       -0.005       -0.031
Region                           -0.050         -0.056         -0.061       -0.082       -0.048
Sector                            0.010         0.007          0.009         0.011        0.005
Tenure                            0.033         0.027          0.020         0.024        0.012
Na                                1722           2588           2365          574         1098
      Table 3b. Mean Log Nominal Gross Weekly Earnings Decompositions
                     (White Natives are the base category).
                                    Non-White      White            Non-White        Black          South Asian
                                     Natives       Immigrants       Immigrants       Immigrants     Immigrants
Total Differential                         0.064           -0.092           0.162           0.171          0.204
Coefficient                                0.070           -0.004           0.242           0.205          0.283
Characteristic                            -0.006           -0.089           -0.080         -0.033          -0.079
Characteristic Components
Age                                        0.038           0.013            -0.005          0.002          -0.009
Schooling                                 -0.059           -0.055           -0.065         -0.053          -0.064
Year                                      -0.008           -0.002           -0.003         -0.003         -0.0001
Married                                    0.028           0.001            -0.016         -0.004          -0.025
Region                                    -0.043           -0.049           -0.053         -0.071          -0.041
Sector                                     0.012           0.008            0.010           0.013          0.005
Tenure                                     0.029           0.023            0.017           0.021          0.011
Occupation:                               -0.003           -0.028           0.034           0.063          0.044
            Professional                  0.0003          0.0012           0.0004         -0.0001         0.0004
            Associate & tech              0.0038          0.0008           -0.0026        -0.0002         -0.0059
            Clerical, secretarial         0.0202          -0.0059          0.0053          0.0019         0.0083
            Craft and related            -0.0162          -0.0218          -0.0179        -0.0208         -0.0131
            Personal, protective          0.0034          0.0133           0.0087          0.0118         0.0013
            Sales                         0.0039          -0.0028          -0.0010        -0.0046         -0.0012
            Plant and machine            -0.0127          -0.0184          0.0124          0.0189         0.0326
            Other occupations            -0.0056          0.0056           0.0290          0.0559         0.0219
Na                                         1722             2588             2365            574            1098
     Table 4. Mean Log Nominal Gross Weekly Earnings
      Decompositions with Occupational Segregation.

                       White       White         White Native/      White
                      Native/      Native/        Non-White       Immigrant/
                     Non-White     White          Immigrants      Non-White
                      Natives      Immigrants                     Immigrants

Total Differential         0.064        -0.092           0.162            0.254

Occupational
Segregation                0.002        -0.038           0.028            0.088
Characteristic             0.005        -0.042           -0.118          -0.084

Coefficient
                           0.057        -0.012           0.252            0.250
Na                         1722          2588             2365            2365
                 Concluding Comments
• The over-representation of white and non-white migrants in the
  professional and managerial categories is a consequence of better
  employment enhancing characteristics on average compared to white
  natives (schooling & region).
• The over-representation of non-white migrants in low paid occupations is
  `unexplained’. A result of (informal network effects, over-education
  effects, historical or cultural ties to certain occupations and an element of
  ethnic based discrimination).
• Black and Other non-white migrant Professionals exhibit a significant
  earnings penalty (S.Asian and white migrants do not).
• Only non-white migrants & black native born Managers & Assoc Profs
  earn less (S. Asians, white migrants and black migrants do not ).
• For the lowest paid (unskilled) jobs: All migrants exhibit lower pay.
• A significant `unexplained’ average earnings differential exists for non-
  white natives, which is larger for non-white immigrants.
• Large favourable characteristic differences partially offset the
  unexplained components to leave the smaller differences we observe
  from the raw data (higher levels of schooling and the geographical
  clustering into the higher paying regions such as the South East).

				
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