The impact of immigration on the wage structure : Spain 1995-2002

Abstract

In this paper we estimate the impact of inward migration flows on the Spanish wage structure over the period 1995-2002 by constructing counterfactual wage distributions that provide the wages that would have been observed had individual and job characteristics remain constant over time. Hence, we compute the impact of immigration on the wage distribution from (i) the estimated wage gaps between similar immigrants and native workers and (ii) the changes in the composition of employment associated to the arrival of new immigrants. Overall, we find that (i) the effects of immigration on wage changes are small and only noticeable when job characteristics are included as determinants of wages, and (ii) the correlation between the incidence of immigration in each decile of the wage distribution and the change in native wages not explained by changes in their individual and job characteristics is positive. These results suggest that other factors, besides immigration, should be identified as the key determinants of the wage moderation observed since the early nineties in Spain.