Job ladders and labour market assimilation of immigrants

Abstract

Using Danish linked employer–employee data, this study examines the importance of access to higher-paying firms in the wage assimilation process among immigrants during their 25-year tenure in Denmark. Upon their arrival, immigrant workers in Denmark earn substantially lower wages than their native counterparts. However, this wage gap diminishes rapidly within the first 5–10 years, particularly among more disadvantaged immigrant groups (non-OECD and female immigrants). Immigrants who enter the labour market early have higher earnings capacity than those who enter later, but this trend reverses after 15 years. The transition to higher-paying firms constitutes a crucial factor in wage assimilation during the initial 5 years, yet it does not account for wage growth beyond this period. Additionally, this study offers suggestive evidence that Danish firms’ wage policies vary based on the duration since migration, and these differences significantly contribute to the wage assimilation process.