{"id":14067,"date":"2021-01-04T16:00:49","date_gmt":"2021-01-04T22:00:49","guid":{"rendered":"https:\/\/uwm.edu\/letters-science\/?p=14067"},"modified":"2023-12-04T15:35:41","modified_gmt":"2023-12-04T21:35:41","slug":"a-foreign-concept-economics-grad-examines-wage-gap-between-natives-and-immigrants","status":"publish","type":"post","link":"https:\/\/uwm.edu\/letters-science\/in-focus-2021\/a-foreign-concept-economics-grad-examines-wage-gap-between-natives-and-immigrants\/","title":{"rendered":"A foreign concept: Economics grad examines wage gap between natives and immigrants"},"content":{"rendered":"

Even if they are employed in the same profession, there is generally a big difference in the salaries between domestic and immigrant employees, and that holds true in countries across the world.<\/p>\n

And, added Eduard Storm, those wage disparities grow more severe among low- and high-wage earners.<\/p>\n

\u201cI was wondering, what can explain those two effects?\u201d he said. To find out, he made it the topic of his PhD thesis.<\/p>\n

Storm himself is a self-described foreign worker. A German native, he participated in an exchange program at 51ÁÔÆæ during his undergraduate days and returned to the university to earn his PhD in economics<\/a>. After graduating this summer, he accepted a position at Carleton College in Minnesota as a visiting assistant professor of economics. That subject has long been a fascination of his, and Storm\u2019s interest only grew when the Great Recession in the United States plunged the global economy into chaos.<\/p>\n

Lately, his interest has turned toward the wage gap between native workers and foreign workers who have immigrated to their new country or work there on visas. His research does not look at illegal immigration.<\/p>\n

Why the wage gap?<\/h2>\n

To find the reasons for a major gap between the salaries, Storm first had to determine what the reasons were not. He did so by examining German survey data. These German survey results were also consistent with U.S. evidence regarding specialization in the workplace.<\/p>\n

\u201cConventional wisdom would tell us there are wage differences because some people have a college degree and others don\u2019t. Some people have 20 years of work experience and others have five,\u201d Storm mused. \u201cHowever, that\u2019s not a satisfactory answer.\u201d<\/p>\n

He points out that increasingly, immigrant workers have the same qualifications, education, and experience as native workers. Perhaps the gap is because native and foreign workers specialize in different occupations. Native workers might have an advantage in certain jobs because they have stronger communication skills in the local language than immigrant workers.<\/p>\n

But that\u2019s not the whole story either, Storm said.<\/p>\n

\u201cIncreasingly, foreign and native workers can also be found in the same professions,\u201d he explained. \u201cI figured there\u2019s got to be something else going on. My hypothesis was that \u2026 maybe (workers) don\u2019t just tend to specialize within certain occupations, but even within those occupations, they do different things.\u201d<\/p>\n

For instance, a native office worker might interact more with clients or be directed to do more sales, while a foreign office worker might be asked to fulfill a role that requires less direct communication. A native worker in higher education might be asked to teach classes while a foreign higher education worker might be in a more research-focused role.<\/p>\n

\u201cI looked at survey data and what I did find was yes, that native and foreign workers might have similar education, similar experience, and have the same occupation, but nevertheless, do different things at work.\u201d<\/p>\n

A failure to communicate<\/h2>\n

While it is tempting to attribute those disparities in job roles \u2013 and subsequent wage gaps \u2013 on prejudice against foreign workers, Storm says he can\u2019t draw any conclusions about workplace discrimination. Instead, he said, he focuses on the bottom line: Employers need their employees to be productive.<\/p>\n

\u201cOf key interest here are tasks that require communication-heavy activities where you have to talk a lot. Here is where language barriers come to play and put foreign workers, to some extent, at a disadvantage,\u201d Storm said.<\/p>\n

Essentially, native workers are, in many cases, better communicators than foreign workers simply because they grew up speaking the local language. As many large economies across the world shift from manufacturing to service-focus industries, communication has become increasingly important. Native workers are more likely to be in communication or customer-facing roles for this reason.<\/p>\n

Encouraging immigration<\/h2>\n

Storm\u2019s research could mean trouble for the future labor market. As population growth tapers in many developed countries, there aren\u2019t enough babies being born to someday replace the aging work force. The solution is to either encourage families to have more children, or to attract more labor through immigration.<\/p>\n

\u201cIf you want to attract skilled labor from other countries down the road, they will pick and choose the places where they can make the most money,\u201d Storm said. \u201cThe U.S., Canada, the UK, Germany, all of those countries are competing for talent from the entire world. So (they) have to think about some policies to make it more competitive for skilled labor to go (there).\u201d<\/p>\n

Germany has begun addressing this problem, recently passing two laws aimed at decreasing occupational segregation between native and foreign workers.<\/p>\n

But native workers shouldn\u2019t worry about their jobs being in danger, Storm added.
\n\u201cWe don\u2019t really see it in the data. It\u2019s not straightforward to replace a native worker with a foreign worker, because they do bring different skills to the table even though they have the same qualifications,\u201d he said.<\/p>\n

\u201cImmigration could, to some extent, exacerbate certain trends, but I think the key takeaway is how we should think about immigration policies moving forward.\u201d<\/p>\n

By Sarah Vickery<\/strong>, College of Letters & Science<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Even if they are employed in the same profession, there is generally a big difference in the salaries between domestic and immigrant employees, and that holds true in countries across the world. 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