Country of Birth and Wage Differentials: Evidence from Belgium

I compute and investigate wage differentials in Belgium between individuals born in the country and five major groups of non-native workers. I find that foreigners, except for those from EU15 countries, earn on average less than natives, with the size of the wage gap varying importantly across the different groups. Applying the Oaxaca-Blinder decomposition to the wage differentials, I find that skills and characteristics only account for a portion of the gaps. Complementarily, a part of the wage differentials remains persistently unexplained, especially for non-European workers. Additional information on industry affiliation and occupation decreases this unexplained part, but it also shows the existence of industrial and especially occupational segregation. Detailed heterogeneity analysis reveals also a prominent role of the time spent in the country in decreasing wage gaps and evidence of glass ceilings rather than sticky floors.