Wage gaps between native and migrant graduates of higher education institutions in the Netherlands

Abstract

In the Netherlands the share of immigrants in the total population has steadily increased during recent decades. The present paper takes a look at wage differences between natives and migrants who are equally educated. This reduces potential skills biases in our analysis of wages. We apply a Mincer equation in estimating the wage differences between natives and migrants. We analyse only young graduates; the conventional human capital factor cannot explain the differences in monthly gross wages. Therefore, we have to look further into “otherness” factors, such as parents’ roots, to find an alternative explanation. Our empirical results show that acquiring Dutch human capital, such as Dutch-specific skills, language, and even integration in the long-term for first-generation migrants, and for a group of second-generation migrants with a non-OECD background, do not overcome wage differences in the Dutch labor market. Furthermore, age structure also plays a role in the payment of different wages in the labor market due to an age discrimination effect: immigrants who invest in their education at later age earn lower wages.