Immigrants' Earnings Decrease Across Generations
In a recent study commissioned by the journal "Nature", researchers from the Nuremberg Institute for Labour Market and Occupational Research (IAB) analysed the wage gaps between immigrants and native workers in nine countries, including Germany. The study found that Germany experiences a larger wage gap between immigrants and natives compared to several other Western countries, particularly in the second generation.
For first-generation migrants, the wage gap stands at 19.6%, higher than in Denmark, Sweden, and the United States, though less than in Spain and Canada. Notably, three-quarters of this gap is attributed not to unequal pay for the same work, but to immigrants’ limited access to better-paying industries, occupations, and companies. The remaining gap (about 4–5%) is due to immigrants being paid less for the same roles at the same employers.
For second-generation immigrants, the gap in Germany (7.7%) is above the international average (5.7%), and descendants of migrants from Africa and the Middle East are particularly disadvantaged. This suggests that structural barriers remain significant even for those born in Germany to immigrant parents.
The primary driver of the wage gap in Germany is the structural access barriers that immigrants and their descendants face. Immigrants may lack access to established professional networks, have foreign credentials that are not fully recognized, and face language barriers that restrict opportunities, particularly in sectors where German language skills are critical.
To address these disparities, the study’s authors and experts highlight several policy directions. Improving systems to assess and recognize educational and professional credentials obtained abroad, expanding language education and vocational training tailored to the needs of immigrants, especially in high-demand sectors, creating programs that connect immigrants with mentors, professional associations, and networks within target industries, and improving access to information about job opportunities, application processes, and career pathways in well-paid sectors are all essential for breaking down these barriers and narrowing the wage gap.
While all surveyed countries show wage gaps, the reasons and the pace of integration differ. Countries with faster integration, like Sweden and Canada, highlight the importance of proactive policies in addressing wage gaps. Germany’s gap is larger in the second generation than the international average, suggesting that systemic barriers are more entrenched and require targeted, sustained intervention.
In summary, the study finds that the wage gap between immigrants and natives in Germany is primarily due to structural barriers to accessing high-paying jobs, rather than pay discrimination within roles. Countries with faster integration, like Sweden and Canada, highlight the importance of proactive policies in breaking down these barriers and narrowing the wage gap.
- The study indicates that the employment policy in Germany, along with community policies, need to be reevaluated to address the structural barriers immigrants face, particularly in relation to finance, business, and politics, as these factors contribute to the larger wage gap between immigrants and native workers in Germany compared to other Western countries.
- To tackle the widening wage gap in the second generation of immigrants in Germany, the implementation of proactive policies such as improving recognition of foreign credentials, expanding language education and vocational training, creating mentorship programs, increasing access to information about job opportunities, and focusing on high-demand sectors, as suggested by the study's authors and experts, could help in breaking down these barriers and align more closely with the success stories seen in countries like Sweden and Canada.
