Kiel Working Papers, Kiel Institute for World Economics
No 967:
Endowment or Discrimination? An Analysis of ImmigrantNative Earnings Differentials in Switzerland
Stefan M. Golder
Abstract: Recent studies have shown that there are significant
earnings differentials between immigrants and natives in Switzerland. The
goal of this paper is to determine whether these differences can be
attributed to diverging socio-economic endowments or to discrimination. We
use the well-known econometric technique, developed by Oaxaca (1973) and
Blinder (1973), to determine the extent of discrimination. As data on
earnings are available only for employed, we adopt a two-stage Heckman
procedure to correct for sample-selection bias. Our analysis is based on
data from the 1995 wave of the Swiss Labor Force Survey (SLFS). The
decomposition of the earnings differential reveals that the discrimination
effect plays a more important role in the explanation of the earnings
differential than the endowment effect.
26 pages, March 2000
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