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Evolution of wage gap between native-born and migrant youth in Spain

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Evolution of wage gap between native-born and migrant youth in Spain

Begoña Cueto, Marta González Escalonilla and María José Pérez Villadoniga, University of Oviedo;
Project selected in the Call to support research projects on social inequality (LL2020_5)

This paper explores the wage paths of young people who entered the labour market for the first time between 2007 and 2015. Their evolution shows that those who start their working lives during an economic crisis have lower wages than those who do so during upswings, and that these effects persist in the long run. Educational attainment leads to separate impacts, although there are no differences by gender. The most affected in the short run are seemingly young people with basic education levels, whose wages fell substantially during the Great Recession, although a rise was noted during the recovery phase. There are also differences among young people according to their place of birth: first, those born in Spain have lower wages than those born outside of Spain. Nonetheless, the gap is narrowing as a result of higher wage growth for native-born workers. Furthermore, those born in South America and Africa experience the biggest wage losses because they joined the labour market during a time of economic crisis.
Key points
  • 1
       A blockage occurred during the Great Recession that stopped young people from entering the labour market, thereby making it difficult for them to obtain a job. The number of young people who entered the labour market for the first time was halved in 2012 compared to 2007.
  • 2
       Those entering the labour market during an economic crisis have lower wages than those entering during an upswing. The annual entry wage in 2012 was 60% of the same wage in 2007.
  • 3
       People born outside of Spain have annual entry-level wages that are around 10% higher than the wages of those born in Spain. Although after one year, and with the same work experience, the wages of native-born people increase more than those of people born outside of Spain with the same experience. This difference is in favour of natives after five years.
  • 4
       Young people with low educational attainment – both natives and immigrants – experience the biggest wage losses from entering the labour market during a crisis. These annual wages are halved.
  • 5
       The differences in wage paths are greater between natives and immigrants with higher educational attainment.
  • 6
       The impact of the crisis differed by region of origin. Young people born in South America and Africa experienced the greatest negative impact.
Half the number of young people entered the labour market in 2012 compared to 2007
Half the number of young people entered the labour market in 2012 compared to 2007

Number of first-time social security registrations by place of birth, and percentage of registrations of those born outside of Spain as a proportion of total, 2007-2015.

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