Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70050
Authors: 
Lang, Günter
Year of Publication: 
2000
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe, Institut für Volkswirtschaftslehre der Universität Augsburg 197
Abstract: 
This study uses the concept of stochastic frontiers for analyzing the income disparity between ethnic groups in West Germany. Estimation of a potential rather than an average earnings function increases the explanatory power of the human capital approach and allows for detecting discrimination as well as assimilation processes. The empirical results im-ply that the human capital gap explains more than 75% of the wage differential between natives and foreign nationalities in Germany. As for ethnic Germans migrants, their wage disparity can be explained by 50% with human capital differentials. Surprisingly, only small differences could be observed with regard to the question of earnings efficiency. On an average, inhabitants as well as immigrants transformed about 85% to 90% of their potential income into actual earnings. The sources for the individually diverging efficiency ratios are not well understood, with discrimination only found for ethnic Germans from Eastern Europe. Somewhat disappointing, the assimilation hypothesis was clearly rejected for all migrants with again the exception being ethnic Germans from Eastern Europe.
Subjects: 
Immigration
Assimilation
Discrimination
Earnings Frontier
Human Capital Approach
JEL: 
J31
J61
J71
Document Type: 
Working Paper

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