Immigration-Native Wage Gaps: Literature Review

 

Background

The United Kingdom being a developed country receives migrants from all corners of the globe. Work and employment opportunity contributes the highest percentage of immigrants at 71% (The Migration Observatory/University of Oxford, 2020). Most of the immigrants in the country come from countries that are non-members of the European Union. The studies by the Migration Observatory outlined that approximately 62% of the total immigrants come from countries that are not members of the European Union. As the majority of the immigrants trickle in the country, not as asylums but job seekers who are seeking greener pastures and opportunities available in the United Kingdom, the question of wage gap begins to arise. The non-British experiences a pay gap the moment they arrive in the United Kingdom even though the gap reduces as they continue to stay and work in the country. The study Dickens & McKnight (2008) found out that even though people from different countries have been migrating to the United Kingdom to offer their expertise and be incorporated in the workforce, they earn much less with men experiencing a 30% wage gap against 15% of their female counterparts.

One fascinating aspect that comes out from the research is that male immigrants take as long as 20 years to bridge the wage gap while women take between 4 and 6 years to catch up with their native counterparts (Dickens & McKnight, 2008). The primary question is what could be the reason for the wage gap between the immigrants and the natives. Brynin & Güveli (2012) attempted to answer this question insinuating the white British workers earned higher than other ethnic and racial groups with the country. This finding points towards discrimination as one of the reasons why immigrants could be receiving lower wages as opposed to their native counterparts. In this regard, it remains unclear whether background could be one of the factors that contribute to the wage gap experienced by the immigrants or non-natives who have migrated to the United Kingdom in search of a job or any other reason but gets lucky to get admission in the British labor market.

In this paper, the main argument shall be that individual or family background affects cognitive and non-cognitive development, which induce the immigrant-native wage gap. It focuses on the background factors, which include gender, age, education level, parents’ education level, migration time, occupation, migration time, occupation, and neighborhood. For instance, the cognitive and non-cognitive ability could be because of the difference in the education system since the United Kingdom has higher people with a college education as opposed to the immigrants’ counterparts and the professional training that is through apprenticeship (Dustmann, Glitz & Vogel, 2010). Similarly, there could be background reasons why immigrants earn less than their counterparts such as lack of preference from the employers on immigrants just like on asylums (Ruiz & Vargas-Silva, 2018). In this case, the paper aims at determining how background factors affect human cognitive and non-cognitive abilities, which in turn affects the general productivity and wage gaps of foreign-born employees in the United Kingdom.

Literature Review

Cognitive and Non-Cognitive Skills

Cognitive abilities are defined as brain skills that allow human beings to carry out any tasks from the simple to complex (Glewwe, Huang & Park, 2011). Cunha, Heckman & Schennach (2010) defines the same concept as a stock of skills that is essential in carrying out tasks. This research outlines that cognitive skills come from an unobserved accumulation of factors that determine the cognitive skills. Sala, & Gobet (2016) builds on the concept by outlining that cognitive skills are transferable across different domains and therefore important in learning new skills. Bediou, Adams, Mayer, Tipton, Green, & Bavelier (2018) further the studies by outlining the importance of cognitive skills or ability. Among the significance, include improving perception, ability to multitask, problem-solving, spatial cognition, verbal cognition, and inhibition among others. The outline not only the concept of cognitive ability but also its significance in the labor market.

Non-cognitive abilities, on the other hand, defines workers’ patterns of feelings and behaviors at the workplace and the environment (Zhou, 2016). The abilities improve a person’s social and interaction abilities both at the workplace and beyond (Quieng, Lim & Lucas, 2015). A study on early birds in daycare found out that non-cognitive ability in children in their early ages affects their future academic achievements (Peter, Schober & Spiess, 2016). Non-cognitive skills are more of personal conduct or characters of a worker that is shaped by family background, schools, and social environment (Kautz, Heckman, Diris, Ter Weel & Borghans, 2014). The study of fostering and measuring skills found out that social and school environment are important factors in determining and shaping the non-cognitive skills. Similarly, Garcia (2016) orients the sentiments on non-cognitive skills by outlining that they are central not only in education but in also broader life, which includes employment among others. Cognitive skills according to the literature define an employee’s character that is relevant in determining his or her soft skills.

The studies on how to develop cognitive and non-cognitive skills found out that individual background and academic processes are crucial in improving individual competence (Hoeschler, Balestra & Backes-Gellner, 2018). The study on how school affects cognitive skills found out that schooling increases intelligence scores while non-schooling has almost no effects (Carlsson, Dahl, Öckert & Rooth, 2015). Similarly, it acknowledged that cognitive skills are important in labor competence and affect the individual wage by about 10% to 20%. In another perspective, Mondon & Winter (2019) found out that the United Kingdom uses background, especially race to determine competence and benefit in the workplace. It outlines that racialization plays an important role in tackling the immigration issue that faces. Lundberg (2017) asserts that employers need attributes and therefore non-cognitive skills are essential and paramount for the employees. The literature in this perspective outline that both cognitive and non-cognitive skills are essential for employees to engage themselves in the work environment effectively and efficiently (Sheikh, 2015). As a result, they all outline how social environment, schooling, and individual background are essential in shaping a person’s cognitive and non-cognitive abilities.

Relationship between Family Background, and Cognitive and non-cognitive abilities.

The study on how home environment affects motor and cognitive skills home or family factors (affordances) are essential in promoting motor and cognitive skills among children (Miquelote, Santos, Cacola, Montebelo & Gabbard, 2012). The research that used the Bayley Scales and Toddler development to estimate the effect of family factors in the development of cognitive skills claimed that family background has a significant effect on the development and cognitive skills. On different research, the notion of malleability and difference in cognitive skills resulted from a mixture of both genetic and environmental influences (Kendler, Turkheimer, Ohlsson, Sundquist & Sundquist, 2015). For instance, it claimed that adoption is a possible enhancer of cognitive ability on children. Marks (2013) outlined a direct relationship between education, social environment, and cognitive ability and determined that socioeconomic factors are key in determining a personal cognitive ability. The literature in this perspective outline that family background and socioeconomic factors affect individual cognitive ability.

Several economic studies have determined that both cognitive and non-cognitive skills are essential in the workplace productivity and performance. Anger & Schnitzlein (2017) established that family background is important for non-cognitive skill formation. One of the factors mentioned is the difference in parental skills and family background as a key factor in determining the non-cognitive ability of a person (Nguyen, Connelly, Mitrou Taylor & Zubrick, 2019). Fletcher & Wolfe (2016) studied the impact of family income on non-cognitive ability. It found out that parental socio-economic factors are important for a child’s future economic status. The same concept is built suing parental education status where the study determined that parental education, especially mother’s education improves both the cognitive and non-cognitive skills of children (Lundborg, Nilsson & Rooth, 2014). The result found out that high maternal education improves both cognitive and non-cognitive skills, and the general health of a child, which in turn improves the stature of a person. These articles, in this case, outline the essence of family background in developing both cognitive and non-cognitive abilities and improve the general social, economic, and professional qualities and status of a person.

How Cognitive and Non-Cognitive abilities influence Wages and the Wage gap

Studies have shown that there is a positive correlation between cognitive and non-cognitive ability and live outcomes like economic achievements. Individuals from highly educated parents tend to have high cognitive and non-cognitive skills, and ultimately labor market performance (Lundborg, Nilsson & Rooth, 2012). Similarly, the research has a direct relation between skills and job satisfaction. Nikoloski & Ajwad (2014) difference in the kind of jobs such as the private sector, analytical jobs might require non-routine cognitive skills that other employees might not have. Even though the article describes contradictory information that points to a negative correlation between skills and labor market outcomes, it acknowledges that skills are associated with higher wages. Additionally, Brunello & Schlotter (2010) provide categories of non-cognitive skills as social skills, motivation, and leadership as important skills that can determine whether one succeeds in the job market or not. The literature in this perspective proves the notion that both cognitive and non-cognitive skills are essential for labor market success and higher wages.

The concept that comes out is the flexibility of the worker to adapt to new roles and work environment as the main reasons why cognitive and non-cognitive skills are essential. Brunello & Schlotter (2011) claimed that cognitive and personal traits go beyond school experience and knowledge and incorporates traversal skills that are important in the development and acquisition of more skills. Lindqvist & Vestman (2011) brings a different perspective by outlining that cognitive abilities are stronger predictors of high wages compared to non-cognitive ones. However, it acknowledges that cognitive skills constitute a 9.8% increase in wages compared to 6.9% for non-cognitive counterparts. Similarly, the research to determine whether it is perseverance or smartness that pays that smartness (cognitive and non-cognitive skills) are highly valued in the market. Díaz, Arias & Tudela (2012) argued that skills are a combination of genetic and environmental factors where individuals with cognitive and non-cognitive skills tend to establish themselves in the job market earlier and faster. As a result, previous studies have shown that both cognitive and non-cognitive skills are essential in influencing the wage hence inducing the pay gap.

Causes of Wage Gap in the United Kingdom

The studies have listed three factors as the main causes of the wage gap in the United Kingdom, gender, immigration, and discrimination. Fortin Bell & Böhm (2017) determined that gender is the main cause of the wage gap in the United Kingdom where it mentions underrepresentation at the top leadership in most organizations as the primary reason the gender wage gap. In another study, Fogel (2015) noted that immigration in the country is another major reason that causes the wage gap where the natives earn more than immigrants do. It found out that immigration results in skills gaps, ethnic profiling, and racial discrimination, which in turn results in the wage gap in the country (Hunt, 2012). Ethnic and racial discrimination relies extensively on the attitude and conduct of the employers, such as prejudice where the minority earns lower than the majority (Carlsson & Rooth, 2016). Similarly, might be facing a wage gap on immigrants due to ethnic discrimination and the desire to reduce immigrants in the country (Koch, 2016). As a result, the literature portrays gender, ethnic and racial discrimination, and immigration as the factors for the wage gap in the United Kingdom.

Research Gap.

From the literature, it is evident that research has been carried out to determine the causes of the wage gap in the United Kingdom. The research focuses more on the factors that affect the natives while there are little studies on why immigrants earn less than their native counterparts apart from ethnic and racial discrimination. The available studies have not determined if there is any link between family background, skill gap, and ultimately wage gap. As a result, there is a need to research and comprehensive studies to determine whether family background has a direct impact on the cognitive and non-cognitive skills in the United Kingdom and whether the skills affect individual wages hence inducing the immigrant-native wage gaps. As a result, this research is essential in finding out how family background, cognitive and non-cognitive skills results in the wage gap between immigrants and natives in the United Kingdom.

Conceptual Work

Pathway Diagram

The following diagram represents the research framework that involves the factors that are considered. It analyzes how family background affects cognitive and non-cognitive abilities and how the three factors combined affect earnings hence inducing the immigrants-native wage gap.

Problem definition

The United Kingdom receives hundreds of thousands of people every year who come in the country to seek employment opportunities. The year that ended March 2020 recorded 194 557 work-related Visas (Gov.UK National Statistics, 2020). The same time in March 2019 recorded more than 600000 immigrants that migrated to the United Kingdom to stay there for more than 12 months and possibly seeking employment in the country (Office for National Statistics, 2019). The problem that comes out is the wage gap between the immigrants who get in the country and the natives and there is little information to analyze the possible cause of the wage gap. The immigrants continue to earn less than natives despite being in the same job group or similar profession. Some research found out that English proficiency could be the reason for the wage gap (Miranda & Zhu, 2013). Others have related the gap to deficiency in transferable skills among the immigrants in the United Kingdom (Lancee & Bol, 2017). However, there is little research and information that targets individual background and explain whether it contributes to the wage gap and ways in which it contributes. Similarly, no studies explain whether immigrants’ background contributes to their cognitive and non-cognitive abilities that are essential in employee’s productivity and wages hence the immigrant-native wage gap.

Significance of the Research

This research is important in analyzing the relationship between family background attributes, cognitive and non-cognitive skills, and the wage gap in the United Kingdom. It bridges the information gap because available research and information discuss the same concept on the non-migration concept. Similarly, few studies address the concept of how non-cognitive skills can influence individual earning and induce the wage gap in the context of the United Kingdom. As a result, it is significant to research in bridging the knowledge gap and creating insights on how cognitive and non-cognitive skills have contributed to the migrant-native wage gap.

Research Objectives

The main objective of this research is to find out how immigrants and natives’ backgrounds in the United Kingdom contribute to the immigrant-native wage gaps. In this case, the focus is to analyze the relationship between background and cognitive and non-cognitive abilities and ways in which the connections play out in determining the employees’ wages in the United Kingdom. However, specific objectives include:

1. To investigate and analyze how family background attributes affect cognitive development in the United Kingdom.
2. To find out how family background attributes affect non-cognitive abilities in the United Kingdom.
3. To determine and discuss how cognitive and non-cognitive abilities affect the earnings and induce the immigrant-natives wage gap in the United Kingdom.

Research Questions

The primary research question is how does family background affect employees’ earning and lead to the wage gap between immigrants and natives in the United Kingdom. However, specific research questions include:

1. How does family background attributes affect cognitive and non-cognitive development among residents of the United Kingdom?
2. Do cognitive and non-cognitive skills influence the degree of integration in the United Kingdom labor market for non-UK born overtime?
3. Do cognitive and non-cognitive abilities influence the employees’ earnings and contribute to the immigrant-natives wage gap?

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