Wage Differentials between Immigrants and the Native-Born in Australia

Abstract

This study examines the wage differentials along the entire distribution between immigrants and the Australian-born. The results show that the productivity characteristics and the returns to the characteristics reinforce each other for immigrants from English-speaking countries, putting them in a favourable position relative to the native-born. Male immigrants from non-English-speaking (NESC) have little wage difference from their native-born counterparts since their favourable productivity characteristics are offset by disadvantage in the returns to the characteristics. Female immigrants from NESC are advantaged at the upper but disadvantaged at the lower part of the wage distribution relative to their native-born counterparts. Our results suggest that the increasingly skill-based immigration policy in Australia has resulted in increasing skill levels of immigrants relative to the Australian born. However, due to unfavourable rewards to their productivity factors NESC immigrants, especially males, earn less than the Australian born.