Firm productivity and immigrant-native earnings disparity

Author: Cristina Bratu, And Stefano Lombardi, And Anna Thoresson, And Olof Åslund, And

Summary of

Working paper


We study the role of firm productivity in explaining earnings disparities between immigrants and natives using population-wide matched employer-employee data from Sweden. We find substantial earnings returns to working in firms with higher persistent productivity, with greater gains for immigrants from non-Western countries. Moreover, the pass-through of within-firm productivity variation to earnings is stronger for immigrants in low-productive, immigrant-dense firms. But immigrant workers are underrepresented in high-productive firms and less likely to move up the productivity distribution. Thus, sorting into less productive firms decreases earnings in poor-performing immigrant groups that would gain the most from working in high-productive firms.

Keywords: Firm productivity; Immigrant-native earnings gaps; Wage inequality
JEL Codes: J15; J31; J62