Licensing, Educational Credentialing, and Wages Among Foreign Skilled Workers in Germany

Abstract

The article studies whether foreign skilled workers have similar access to licensed and more credentialed occupations, and whether they profit from these regulations in terms of similar wages in these occupations to comparable domestic skilled workers. The theoretical foundations of this article are concepts of signaling and occupational closure. The analyses use a sample of 60,000 employed persons from the 2006, 2012 and 2018 Employment Surveys of the German Federal Institute for Vocational Education and Training (BIBB) and the Federal Institute for Occupational Safety and Health (BAuA), and a reweighting approach to account for the selection on observables. Results show an ambivalent picture of the regulation of occupations: on the one hand, at least foreign skilled men earn similar wages to domestic skilled men in more closed occupations; on the other hand, foreign skilled workers are less likely to enter these positions and they have monetary disadvantages compared with domestic skilled workers in less closed occupations.