A foreign concept: Economics grad examines wage gap between natives and immigrants Even if they are employed in the same profession, there is generally a big difference in the salaries between domestic and immigrant employees, and that holds true in countries across the world. And, added Eduard Storm, those wage disparities grow more severe among low- and high-wage earners. “I was wondering, what can explain those two effects?” he said. To find out, he made it the topic of his PhD thesis. Storm himself is a self-described foreign worker. A German native, he participated in an exchange program at UWM during his undergraduate days and returned to the university to earn his PhD in economics. After graduating this summer, he accepted a position at Carleton College in Minnesota as a visiting assistant professor of economics. That subject has long been a fascination of his, and Storm’s interest only grew when the Great Recession in the United States plunged the global economy into chaos. Lately, his interest has turned toward the wage gap between native workers and foreign workers who have immigrated to their new country or work there on visas. His research does not look at illegal immigration. Why the wage gap? To find the reasons for a major gap between the salaries, Storm first had to determine what the reasons were not. He did so by examining German survey data. These German survey results were also consistent with U.S. evidence regarding specialization in the workplace. “Conventional wisdom would tell us there are wage differences because some people have a college degree 8 • IN FOCUS • December, 2020
and others don’t. Some people have 20 years of work experience and others have five,” Storm mused. “However, that’s not a satisfactory answer.” He points out that increasingly, immigrant workers have the same qualifications, education, and experience as native workers. Perhaps the gap is because native and foreign workers specialize in different occupations. Native workers might have an advantage in certain jobs because they have stronger communication skills in the local language than immigrant workers. But that’s not the whole story either, Storm said. “Increasingly, foreign and native workers can also be found in the same professions,” he explained. “I figured there’s got to be something else going on. My hypothesis was that … maybe (workers) don’t just tend to specialize within certain occupations, but even within those occupations, they do different things.” For instance, a native office worker might interact more with clients or be directed to do more sales, while a foreign office worker might be asked to fulfill a role that requires less direct communication. A native worker in higher education might be asked to teach classes while a foreign higher education worker might be in a more research-focused role. “I looked at survey data and what I did find was yes, that native and foreign workers might have similar education, similar experience, and have the same occupation, but nevertheless, do different things at work.” A failure to communicate While it is tempting to atrribute those disparities in job roles – and subsequent wage gaps – on prejudice against foreign workers, Storm says he can’t draw any
