Reducing the Immigrant Wage Gap Through Skill Regulation: Evidence from the Danish Construction Sector

• In Event: Race/Ethnicity/Immigration and Stratification

Abstract

Despite extensive research on the immigrant wage penalty, little is known about how trade protection—legal regulation and required certification—and formal vocational credentials jointly shape overall wages and the wage gap between immigrants and native workers. We address this question using Danish registry data on all workers aged 35–45 in the four largest construction trades in Denmark between 2010 and 2019. Our sample includes 219,354 observations (54,557 unique individuals), of which 8,314 observations (2,966 unique individuals) are for immigrants. To assess the effects of regulation and credentials, we exploit differences in certification requirements across trades. Certification is legally required in “protected” trades (plumbers, electricians) but not in “unprotected” trades (carpenters, bricklayers). Using quantile regression to predict median wages, we show that immigrants face substantially larger wage penalties in unprotected trades, regardless of certification. Importantly, the returns to certification are especially pronounced in protected trades, where the wage premium for certified immigrants is more than double that in unprotected trades. These findings suggest that policies governing certification and trade regulation can help reduce immigrant–native wage gaps in vocational occupations by limiting opportunities for discrimination.

Authors

• Robert C Andersen, Western University

• Anders Holm, Western University

• Kamma Andersen