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Open AccessArticle

Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal?

1
Department of Economics, Hanyang University, 55 Hanyangdaehak-ro, Sangnok-gu, Ansan, Gyeonggi-do 426-791, Korea
2
Luxembourg Institute of Socio-Economic Research and University of Luxembourg, Maison des Sciences Humaines, 11 Porte des Sciences, L-4366 Esch/Alzette, Luxembourg
*
Author to whom correspondence should be addressed.
Econometrics 2018, 6(3), 41; https://doi.org/10.3390/econometrics6030041
Received: 31 January 2018 / Revised: 31 August 2018 / Accepted: 31 August 2018 / Published: 7 September 2018
(This article belongs to the Special Issue Econometrics and Income Inequality)
This paper draws upon influence function regression methods to determine where foreign workers stand in the distribution of private sector wages in Luxembourg, and assess whether and how much their wages contribute to wage inequality. This is quantified by measuring the effect that a marginal increase in the proportion of foreign workers—foreign residents or cross-border workers—would have on selected quantiles and measures of inequality. Analysis of the 2006 Structure of Earnings Survey reveals that foreign workers have generally lower wages than natives and therefore tend to haul the overall wage distribution downwards. Yet, their influence on wage inequality reveals small and negative. All impacts are further muted when accounting for human capital and, especially, job characteristics. Not observing any large positive inequality contribution on the Luxembourg labour market is a striking result given the sheer size of the foreign workforce and its polarization at both ends of the skill distribution. View Full-Text
Keywords: immigrant wages; wage inequality; cross-border workers; influence function; RIF regression; Luxembourg immigrant wages; wage inequality; cross-border workers; influence function; RIF regression; Luxembourg
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Choe, C.; Van Kerm, P. Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal? Econometrics 2018, 6, 41.

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