Ethnic wage inequalities on the labour market - A matter of opportunities?

This paper explores the career dynamics and wage outcomes of foreign and native young men who have finished vocational education in Germany. Several different groups are compared against the native population: Italians, EU-13, East-Europeans, Ex-Yugoslavs, and Turks. I follow them for seven years beyond their vocational training in the year 2000 by applying random and fixed effects estimations to German register data. The panel design allows in particular for looking at employment histories and analysing the impact of status-changing events on wages, e.g. job mobility. Beyond that, this empirical design enables me to examine 'the opportunity structure for discrimination'. Status-changing events are accompanied by the phase of recruitment, which is probably the most critical point for discrimination in working life. If foreigners receive less job offers their search costs will be higher and lower wages are the observable consequence. The empirical results reveal that some foreign groups are found to be affected by labour market penalties in response to status-changing events. In contrast, wage penalties are not observed for foreign employees who manage to stay with an employer. This supports the assumption that ethnic wage inequalities are a matter of opportunities. [ABSTRACT FROM AUTHOR]