The migrant pay gap in Spain: Where do the differences come from?

Abstract

This paper focuses on the migrant pay gap in Spain. Going beyond descriptive evidence of the differences between immigrants and nationals in terms of wages, we analyse which part of the gross wage is most affected by features that cannot be captured using econometric models. Relying on microdata from the Wage Structure Survey, we divide the total gross wage into two main parts: base wage and wage supplements. Then we decompose the migrant wage gap into the explained and the unexplained terms, using a simple decomposition methodology, the Oaxaca-Blinder model. Our results show that a part of the differences in wage supplements does not seem to be explained by the set of control variables introduced in the model and that this effect is more pronounced when only men are considered. These findings offer a new perspective on the migrant pay gap in Spain and point to the importance of wage-setting practices related to wage supplements in explaining (and widening) the total migrant pay gap in our country.