Institute for Research on Labor and Employment

In this paper, I ask how immigrant/native-born wage gaps differ in two institutionally distinct receiving societies in Western Europe: Sweden, with a comparatively equal wage structure, and the United Kingdom, with a comparatively unequal wage structure. Using large, nationally representative data sets and focusing on 30 immigrant groups that reside in both countries, I document two distinct kinds of inequality between immigrant and native-born workers. In terms of wage percentiles, immigrants fare unambiguously better in the UK, net of human capital, demographic characteristics, and sending country. That is, immigrants achieve higher relative positions in the British labor market than in the Swedish labor market. But immigrant/nativeborn gaps in terms of real wages are at least as large in the UK as in Sweden, and for some groups larger, because overall earnings inequality is so high in the UK. These findings suggest that policies to improve immigrant pay must consider immigrant-specific barriers in the labor market and the detrimental effects of earnings inequality for immigrant workers.