DP14917 Occupational Sorting and Wage Gaps of Refugees

Author(s): Christopher F Baum, Hans Lööf, Andreas Stephan, Klaus F Zimmermann
Publication Date: June 2020
Date Revised: June 2020
Keyword(s): Blinder-Oaxaca decomposition, coarsened exact matching, correlated random effects model, Employer-employee data, Refugees, wage earnings gap
JEL(s): C23, F22, J24, J6, O15
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14917

Refugee workers start low and adjust slowly to the wages of comparable natives. The innovative approach in this study using unique Swedish employer-employee data shows that the observed wage gap between established refugees and comparable natives is mainly caused by occupational sorting into cognitive and manual tasks. Within occupations, it can be largely explained by differences in work experience. The identification strategy relies on a control group of matched natives with the same characteristics as the refugees, using panel data for 2003-2013 to capture unobserved heterogeneity.