Cohort Wage Gap Stagnation
Observational StudyReview
Historically, initial wage penalties faced by new immigrants decayed over time as workers acquired host-country language skills and local experience, achieving wage parity with native-born peers within 10 to 15 years. Modern immigrant cohorts, however, experience persistent wage gaps that fail to close over time, refuting traditional models of automatic long-term labor market integration.
Picture this
Imagine two runners starting a marathon 100 meters behind the lead pack. In past races, trailing runners caught up to the leaders by the halfway mark because their running pace naturally accelerated over time. In modern races, however, trailing runners remain stuck 100 meters behind for the entire 26 miles because structural hurdles along their lane continuously limit their ability to gain ground.
What the evidence says
Immigrants arriving prior to the 1970s eliminated their wage gap within 10 to 15 years. In contrast, immigrants arriving in the 1990s maintained a 25% lower median wage compared to native-born workers even after 10 to 15 years of host-country residence, despite holding substantially higher post-secondary degree completion rates.
- Who was studied
- Microdata analysis from Statistics Canada census filings (2006 Canadian Census public-use files and historical longitudinal cohort data from Frenette & Morissette 2005).
- How
- Longitudinal and cross-sectional cohort comparison tracking entry earnings and 10 to 15 year wage trajectories of immigrant cohorts arriving in the 1970s versus the 1990s relative to native-born workers.
What to do
Policy researchers must redesign labor market assimilation models to address permanent structural barriers rather than relying on time-in-country to eliminate immigrant earnings disparities.
From the source
"While the immigrant-native wage gap used to disappear (and sometimes even reversed sign) after 10 to 15 years for immigrants arriving prior to the 1970s, wages of immigrants arriving in the 1990s are still about 25 percent lower than wages of non-immigrants even after 2005 (Marc Frenette and René Morissette 2005)."
Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes