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Abstract: This article analyses differences in dynamic transitions into and out of any of the five hourly wage quintiles and quintile zero (unemployed and non‐employed people) between immigrants and natives for the period 1993‐2004. Using Longitudinal Level data from Survey of Labour and Income Dynamics (SLID) for men aged 25 to 55, we investigate how unobserved heterogeneity factors and initial conditions may affect individuals’ propensity to stay in or leave any of the wage quintiles. We also consider a dynamic multinomial logit model with the random effects approach. Empirical results show that state dependence exists in all hourly wage quintiles. Moreover, education, experience, marital status, immigrant minority status, and age at immigration are significant factors determining hourly wage differentials between immigrants and natives. [ABSTRACT FROM AUTHOR]