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🍁👪 Immigrants in Europe and North America earn 18% less than natives on average 🧑🔎💵

Monday, 18 August 2025 12:00.PM

- Three-quarters of the immigrant-native pay gap is due to limited access to high-paying jobs and industries; the remaining quarter is due to unequal pay.
- Policies to reduce the gap should focus on improving access to higher-paying jobs for immigrants.
- The earnings gap narrows substantially for the children of immigrants, but still persists. -

New resesarch from Frankfurt School of Finance & Management, published in Nature, finds that immigrants to Europe and North America earn almost 18% less than native citizens, largely due to limited access to higher-paying jobs.

Professor Halil Sabanci and colleagues analysed employer-employee data of 13.5 million individuals from Canada, Denmark, France, Germany, Netherlands, Norway, Spain, Sweden and the United States.

The findings reveal an immigrant-native pay gap of 17.9% overall which is not primarily driven by unequal pay for equal work, but by limited access to jobs in higher-paying industries, occupations, and companies for immigrants. Specifically, three-quarters of the immigrant-native pay gap was due to being more likely to end up in lower-paying employment. The pay gap varied widely among countries for first-generation immigrants: Spain (29.9%) and Canada (27.5%) had the largest overall gaps. Norway (20.3%), Germany (19.6%), France (18.9%), and Netherlands (15.4%) saw mid-level differences. The smallest differences relative to natives were found in the U.S. (10.6%), Denmark (9.2%) and Sweden (7.0%).

Earning gap narrows for the children of immigrants

For Canada, Denmark, Germany, Netherlands, Norway, and Sweden, researchers also looked at the earnings patterns amongst the children of immigrants. They found that the pay gap shrinks substantially from 17.9% to 5.7% but still persists, especially for children of immigrants from Africa and the Middle East. Notably, when comparing those doing the same job for the same employer, the second-generation gap drops further to around 1.1%, indicating much greater parity.

"These findings shed new light on persistent pay disparities – and have direct policy implications. While enforcing equal pay for equal work matters, the bigger challenge lies in opening access to higher-paying jobs. Addressing hiring bias and improving job-matching programs may go much further", says Professor Sabanci.

The study highlights the importance of policies aimed at improving access for immigrants to roles in higher-paying industries through language training, skill development, job search assistance, domestic education, foreign credential recognition, and enhanced access to job-relevant information and networks.

The paper was first published in the journal Nature.

SOURCE: Frankfurt School of Finance & Management

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