Immigrants’ Wage Performance in a Routine Biased Technological Change Era: France 1994–2012

• Published date: 01 October 2019
• Author: Eva Moreno‐Galbis,Jeremy Tanguy,Ahmed Tritah,Catherine Laffineur
• DOI: http://doi.org/10.1111/irel.12245
• Date: 01 October 2019

Immigrants’Wage Performance in a Routine

Biased Technological Change Era: France

1994–2012

EVA MORENO-GALBIS , JEREMY TANGUY ,

AHMED TRITAH and CATHERINE LAFFINEUR*

Over the period 1994–2012, immigrants’wage growth in France outperformed

that of natives. We investigate to what extent changes in task-specific returns to

skills contributed to this wage dynamics differential through two channels:

changes in the valuation of skills (price effect) and occupational sorting (quantity

effect). We find that the wage growth premium of immigrants is mainly explained

by the progressive reallocation of immigrants toward tasks whose returns increase

over time. Immigrants seem to have taken advantage of labor demand restructur-

ing driven by globalization and technological changes.

Introduction

Immigrants are a major workforce component and the main source of work-

force growth in most developed countries. Not surprisingly, therefore, immi-

gration and immigrants are at the forefront of wide-ranging policy debates.

One central and often contentious issue is the extent to which immigrants are

successful in their host countries’societies, of paramount importance in

designing sustainable migration policies. This success depends largely on

immigrants’labor-market integration, mainly determined by their skills and

how these are valued in their host country labor markets. In this article, we

analyze how the relative wage performance of immigrants has evolved in

France over recent decades in relation to labor-market changes (i.e., labor

demand shifts and variation in returns to skills).

JEL codes: J15, J24, J31, J61, O33.

*The authors’affiliations are, respectively, Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, IRD,

AMSE, Marseille, France. E-mail: eva.moreno-galbis@univ-amu.fr; University Savoie Mont Blanc, Annecy,

France. E-mail: jeremy.tanguy@univ-smb.fr; Le Mans Universit

e, Mines ParisTech, Institut Convergences

Migrations, Paris, France. E-mail: ahmed.tritah@univ-lemans.fr; and University of Nice Sophia Antipolis,

Nice, France. E-mail: catherine.laffineur@unice.fr. Eva Moreno-Galbis acknowledges financial support from

the Institut Universitaire de France and the French National Research Agency Grant ANR-17-EURE-0020.

INDUSTRIAL RELATIONS, DOI: 10.1111/irel.12245. Vol. 58, No. 4 (October 2019). ©2019 Regents of the

Universit y of Calif ornia. Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA,

and 9600 Garsington Road, Oxford, OX4 2DQ, UK.

623

Immigrants’relative wage performance and wage dynamics are widely doc-

umented in the literature. Three factors are traditionally put forward to explain

wage differences between immigrants and natives. A first factor is human capi-

tal in a broad sense, i.e., including schooling, experience, and language skills

(see Boudarbat and Lemieux [2014], Algan et al. [2010], Card [2005], Kee

[1995], or Katz and Murphy [1992]).

1

A second factor refers to differences in

reservation wages between natives and immigrants, which put immigrants in a

lower bargaining position compared to natives when they negotiate their wages

with employers (see Nanos and Schluter [2014] for Germany, Moreno-Galbis

and Tritah [2016] for the EU, and Gonzalez and Ortega [2011] for Spain). A

third important factor is discrimination (see Algan et al. [2010], Card [2005],

or Kee [1995]).

Over recent decades, globalization, technological innovations, and other struc-

tural changes have induced both labor-demand shifts and changes in returns to

skills. This process has changed workers’occupational choices, i.e., workers are

likely to have moved toward occupations requiring skills that offer increased

returns. Beyond the traditional factors outlined in the literature, we expect

changes in returns to skills and the ensuing changes in occupational choices to

influence how the immigrant–native wage gap evolves over time. The objective

of this article is to assess the contribution of these two factors to the relative wage

performance of immigrants and natives in France since the early 1990s.

Immigrants’and natives’wage performance are briefly summarized in

Figure 1. Based on the French Labor Force Survey, we ranked occupations in

ascending order according to the median wage paid in each occupation to form

a ladder of twenty equal-sized (i.e., vigintiles) occupational employment

groups.

2

The left-hand panel of Figure 1 displays yearly average employment

growth and the right-hand panel yearly average wage growth, both over that

same skill ladder (i.e., wage ladder). We can see that immigrants’yearly wage

growth out-performed that of natives over the whole occupational wage distri-

bution, and particularly at the bottom of the distribution, where the annual dif-

ference in wage growth is around 1 percentage point.

3

At the top of the skill

1

The debate is centered on the role of the weighting of immigrants’different countries of origin and on

changes in traditional measures of skills as well as their portability. On the other hand, the debate also

focuses on the relative deterioration of immigrants’labor-market outcomes upon arrival in the host country

(Borjas [1995]; Card [2005]; Dustmann, Frattini, and Preston [2013]; or Friedberg [2000]), as well as on the

progressive convergence of immigrants’wages to those of natives with years of residence in the host coun-

try (see Borjas [1994, 1999] or Chiswick [1978] for the United States; Chiswick, Lee, and Miller [2005] for

Australia; Friedberg and Hunt [1995] for Israel; or Lam and Liu [2002] for Hong Kong).

2

Following Autor and Handel (2013) this grouping can be viewed as a skill ladder.

3

The divergent wage dynamics by nativity group is confirmed when estimating a quadratic equation re-

lating (log) wage changes to initial wages.

624 / EVA MORENO-GALBIS,JEREMY TANGUY,AHMED TRITAH AND CATHERINE LAFFINEUR

distribution, the yearly difference in wage growth is around 0.5 percentage

point in favor of immigrants.

4

Note that this higher wage growth of immi-

grants is robust to changes in population composition in terms of age, educa-

tion, and length of residence

5

(see Figure C1 in Appendix C.1). The pattern of

immigrants’employment across the occupational wage distribution in France

is unusual, contrasting sharply with that observed in the United States. In

particular, Basso, Peri, and Rahman (2017) showed a sharp increase in the

.3 .4 .5 .6 .7 .8

Yearly employment change (%), 1994−2012

0 5 10 15 20

Initial occupational wage vigintiles

−2 0 2 4 6

Yearly wage change (%), 1994−2012

0 5 10 15 20

Initial occupational wage vigintiles

Natives Fitted values Immigrants Fitted values

FIGURE 1

AVERAGE YEARLY EMPLOYMENT AND WAGE GROWTH OVER THE 1994 MEDIAN WAGE IN THE

OCCUPATION,FRENCH LFS 1994–2012

Notes: Occupations are ranked in the x-axis in ascending order according to their median real

wage in 1994, computed on native full-time equivalent workers, and then grouped within

occupational wage vigintiles. The y-axis in the left-hand panel represents yearly average

employment growth between 1994 and 2012 by vigintile, while in the right-hand panel it

represents the yearly average real wage growth by vigintile over the same period. [Color

figure can be viewed at wileyonlinelibrary.com]

4

This finding is consistent with Manacorda, Manning, and Wadsworth (2012) who, working with UK

data, also show evidence of convergence in wages of immigrants and natives between 1973 and 2007.

5

Unfortunately, our database does not contain information on language proficiency. Consistent with the

findings of Lewis (2013), we proxy this variable by years of residence in the host country.

Immigrants’Wage Performance / 625