Skill Premia and Immigrant-native Wage Gaps

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Summary & aims

In a very short period of time Eastern European immigrants have become one of the largest immigrant groups in the UK labour market. This study examines the developments in the skill distribution of EU8 immigrants and UK natives between 1998 and 2008 in the UK, exploring to what extent wage differentials between these two groups are explained by the changing attributes of migrants and natives or by differences in returns to skill.


Using the UK Labour Force Survey, the study compares the evolution of the immigrant-native wage gaps over two periods (before and after 2004) and compare them with those of other immigrant groups. The unconditional quantile regression is used to decompose the immigrant-native gap at different percentiles of the wage distribution. Results show that, at all points of the distribution occupational downgrading plays an important role. In order to rule out the possibility that the increase in the gap is simply the result of the lack of labour market assimilation, as the majority of EU8 immigrants only arrived after 2004, the study compares recent immigrant groups after 2004. Results suggest that the decrease in the wage levels in particular at the top of the distribution is likely to be due to the lack of transferability of skills acquired in the source country. Timescale and funder The evaluation is funded by the LLAKES Centre. It began in December 2012 and was completed in February 2013.  

Findings and Recommendations

A  version of the paper can be found here