Immigrants in wealthy countries earn less - not because of bias, but because of job segregation: Study

Immigrants working in high-income countries earn 17.9% less per year than native-born workers on average, even after adjusting for education, age, gender, and location. But according to a major study published in Nature, the wage gap has less to do with unequal pay for the same work, and more to do with who gets access to high-paying jobs in the first place.

The study, based on administrative data from 13.5 million workers across nine countries, including the United States, Canada, Germany, France, Spain, Sweden, Denmark, the Netherlands, and Norway, found that nearly 75% of the immigrant-native pay gap is explained by between-job segregation, rather than unequal pay within the same job.

When researchers compared immigrants and natives in the same job and company, the pay gap shrank significantly, to just 4.6%.

Pay gaps vary sharply across countries

Among the countries studied, Canada and Spain had the largest pay gaps, with immigrants earning 28–29% less than native workers. The United States, Denmark, and Sweden recorded the smallest differences—between 7% and 11%. Notably, Sweden showed no significant within-job wage gap.

Children of immigrants are catching up

For second-generation immigrants, those born in destination countries, the wage gap narrows substantially. After adjusting for standard factors, they earn 5.7% less than natives, but the gap drops to just 1.1% when comparing workers in the same occupation and company. The pattern of intergenerational economic progress was visible across all nine countries.

Region of origin plays a role

The study also found stark differences in earnings based on the region of origin. Immigrants from Sub-Saharan Africa and the Middle East and North Africa earned 24–26% less than natives. Those from Asia and Latin America earned 19–20% less, while immigrants from Western countries had a smaller gap of around 9%. These differences persisted even within the same job roles.

Policy implications: job access over pay equality

The findings suggest that equal pay legislation, while essential, is not sufficient to address the root causes of wage disparity.

Instead, they advocate for policy efforts aimed at reducing job segregation, including language training, credential recognition, job placement programs, and reforms to reduce employer bias in hiring and promotions.