Do EU anti-discrimination provisions make a difference?

Abstract

The prohibition of all types of discrimination is one of the tenets of the European Union (EU), but we know little about their effects in EU member states. Our hypothesis is that such regulations prevent within-job wage discrimination against EU foreigners in national labor markets. We test this assumption by decomposing changes in wage differences between German male employees and foreigners in the West German labor market by applying Juhn-Murphy-Pierce decompositions on administrative data. The findings generally support our hypothesis. While wage discrimination decreased for most groups of EU foreigners and for most rounds of EU enlargement, it rose for most groups of third-country nationals. We conclude that EU anti-discrimination provisions and case law ensuring free movement mitigate wage discrimination against EU foreigners in the German labor market.