Wage differentials between male-female and native-foreign workers in pre-unification Germany

This paper investigates the relative remuneration of migrants and German nationals in paid employment in pre-unification Germany. Using microdata it shows that migrants typically earn higher wages than comparable German nationals. The paper also shows the distinction between genders and skid levels to be crucial in the determination of wage gaps. Wage gaps are decomposed in the standard Oaxaca-Bfinder way and their development is examined using counterfactual analysis. The paper also shows that conventionally defined wage discrimination works in favour of migrants. Counterfactuals show that, largely, the remunerative advantage of migrants survived the 1981-1983 recession. However, when employment developments are considered, a much bleaker picture arises. The 1981-1933 recession destroyed jobs that have been traditionally occupied by migrants (manual and skilled jobs). Post-recession restructuring generated jobs that went almost exclusively to German nationals (salaried jobs).