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Changes in the Czech Wage Structure: Does Immigration Matter?

By Kamil Dybczak and Kamil Galuscak

Abstract

Using the Albrecht et al. (2003) version of the Machado and Mata (2005) decomposition technique along the wage distribution, we find that immigrant workers do not affect changes in the Czech wage structure between 2002 and 2006 despite their substantial inflows. Instead, changes in the wage structure are explained solely by increasing returns of native workers, while changes in the observed characteristics of native workers, particularly a rising level of education, are responsible for increasing wage dispersion. The sizeable inflows of foreign workers in the sample years are concentrated among young workers with primary and tertiary education and are primarily due to rising labour demand. The negative immigrant-native wage gaps are persistent along the wage distribution and are explained mainly by differences in observed characteristics. We provide evidence on increasing returns to education of native workers along the wage distribution. The returns are higher in 2006 than in 2002, in line with the evidence in the previous literature.Immigration, matched employer-employee data, quantile regression, wage gap decomposition, wage structure.

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  1. [0.00746] [0.00683] [0.00687] [0.00551] [0.00638] [0.00784] [0.00652] [0.00616] [0.00838]
  2. [0.0120]*** [0.0102] [0.00986] [0.0101] [0.00949] [0.0102] [0.0104]* [0.0113]*** [0.0138]***
  3. [0.0249] [0.0254]** [0.0345]*** [0.0414]*** 28 Kamil Dybczak and Kamil Galuščák Quantile Variable
  4. [0.0250] [0.0246] [0.0274] [0.0218]** [0.0261]** [0.0238] [0.0221] [0.0362] Machinery operators
  5. [0.0305] [0.0337] [0.0266] [0.0316] [0.0288]** [0.0275]*** [0.0487] Skilled manual workers
  6. [0.0358] [0.0281] [0.0232] [0.0283] [0.0289] [0.0270] [0.0233]** [0.0296]*** [0.0420]** Health care
  7. [0.0402]* [0.0409] [0.0414] [0.0548] [0.0595] Chemical manufacturing
  8. [0.0438] [0.0429] [0.0340] [0.0392] [0.0481]** [0.0408]** [0.0403]*** [0.0574]***
  9. [0.0441]* [0.0435] [0.0430] [0.0465] [0.0366] [0.0433] [0.0389] [0.0353] [0.0601] Other manufacturing
  10. [0.0454] [0.0407]* [0.0413]* [0.0331] [0.0385] [0.0465] [0.0391]** [0.0374]** [0.0510] Machinery operators
  11. [0.0492] [0.0475] [0.0375] [0.0433] [0.0533] [0.0453] [0.0442] [0.0634]* Hotels/restaurants
  12. [0.0512] [0.0417]** [0.0507] [0.0511] [0.0471]** [0.0399]*** [0.0503]* [0.0701]
  13. [0.0537] [0.0520] [0.0558]* [0.0438]** [0.0512]* [0.0465]** [0.0412] [0.0739] Mining
  14. [0.0555] [0.0446] [0.0542] [0.0542]***
  15. [0.0565]** [0.159] [0.136] [0.161] [0.122] [0.135] [0.124] [0.130] [0.0783] Chemical manufacturing
  16. [0.0570] [0.0591] [0.0582] [0.0639] [0.0501] [0.0593] [0.0529] [0.0481]* [0.0791] Trade
  17. [0.0593]** [0.0577]* [0.0456]*** [0.0529]*** [0.0646] [0.0541] [0.0520] [0.0683] Health care
  18. [0.0596] [0.138] [0.123] [0.109] [0.127] [0.157] [0.119] [0.127] [0.0677] Chemical manufacturing
  19. [0.0633] [0.0615] [0.0665] [0.0728] [0.0573] [0.0670] [0.0601] [0.0541]*** [0.0860]***
  20. [0.0666]*** Changes in the Czech Wage Structure: Does Immigration Matter? 27 Quantile Variable
  21. [0.0685] [0.0743] [0.0812] [0.0643] [0.0756] [0.0674]*** [0.0622]*** [0.107] Construction
  22. [0.0704] [0.0713]** [0.0563]*** [0.0649]*** [0.0802]** [0.0685]* [0.0647] [0.0813] Mining
  23. [0.0706] [0.0572] [0.0636] [0.0730] [0.0558] [0.0568]* [0.0570] [0.0743]** [0.0821]***
  24. [0.0724] [0.0762] [0.0836] [0.0661]* [0.0759] [0.0938] [0.0787] [0.0762] [0.107] Other manufacturing
  25. [0.0919]*** Note: Standard errors in brackets. * significant at 10%; ** significant at 5%; *** significant at 1% Changes in the Czech Wage Structure: Does Immigration Matter?
  26. [0.103] [0.0830]* [0.0981] [0.120] [0.0992] [0.0962] [0.132]***
  27. [0.105]** [0.0968]* [0.0968] [0.0812]*** [0.0941]** [0.117] [0.0928] [0.0880] [0.120] Construction
  28. (2008). [0.111]*** Note: Standard errors in brackets. * significant at 10%; ** significant at 5%; *** significant at 1%. CNB WORKING PAPER SERIES 11/2009 Kamil Dybczak Kamil Galuščák Changes in the Czech wage structure: Does immigration matter?
  29. [0.126]*** Note: Standard errors in brackets: * significant at 10%; ** significant at 5%; *** significant at 1%.Changes in the Czech Wage Structure: Does Immigration Matter? 29 Table
  30. [0.153]*** Note: Standard errors in brackets. * significant at 10%; ** significant at 5%; *** significant at 1% 32 Kamil Dybczak and Kamil Galuščák Table
  31. [0.164] [0.123] [0.148] [0.176]* [0.156]** [0.0784] [0.0798] Trade
  32. [9.79e-05] [9.01e-05] [9.09e-05] [7.29e-05] [8.45e-05] [0.000104] [8.69e-05] [8.16e-05] [0.000112]
  33. (2003). Is There a Glass Ceiling in Sweden?”

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