Wage discrimination against immigrants: measurement with firm-level productivity data

Table 5 Firm-level wage-setting equation according to firm size

	Below median firm size			Above median firm size
Log av. hourly wage	OLS	Fixed effects	GMM-IV	OLS	Fixed effects	GMM-IV
Log av. hourly wage	(1)	(2)	(3)	(4)	(5)	(6)
Labor productivity	0.10*** (0.01)	0.00 (0.00)	−0.00 (0.00	0.10*** (0.01)	0.01* (0.00)	−0.01 (0.00)
Share of foreigners^a	−0.06*** (0.01)	0.00 (0.02)	−0.20 (0.18)	0.02 (0.02)	−0.04** (0.01)	−0.04 (0.06)
Share of women^a	−0.17** (0.01)	−0.11*** (0.02)	−0.25*** (0.11)	−0.18*** (0.01)	−0.13*** (0.02)	−0.17*** (0.06)
Year dummies	Yes	Yes	Yes	Yes	Yes	Yes
Individual and job characteristics^b	Yes	Yes	Yes	Yes	Yes	Yes
Sectors and regions^c	Yes	Yes	Yes	Yes	Yes	Yes
Firm characteristics^d	Yes	Yes	Yes	Yes	Yes	Yes
Observations	11,927	11,927	1961	11,785	11,785	5997
Adjusted R ²	0.66		0.21	0.71		0.31
Within R ²		0.33			0.41
Between R ²		0.51			0.64
Underidentification test^e			0.00			0.00
Weak identification test^f			22.9			103.6
Overidentification test^g			0.22			0.01
Endogeneity test^h			0.33			0.77

Data source: SES-SBS 1999–2010; HAC standard errors in parentheses
***, **, * significant at 1, 5 and 10 % levels, respectively
^aOmitted reference: share of male EU workers
^bIndividual and job characteristics include share of workers younger than 40 years, share of 8 occupational groups (reference: service occupations); 3 educational levels (reference: ISCED 1–2); share of fixed-term contracts; share of workers with more than 5 years of tenure
^cSector and regional controls include 9 sectors (reference: manufacturing) and 3 regions (reference: Flanders)
^dFirm controls include the logarithm of firm size, the logarithm of capital and a dummy for firm-level collective bargaining. All regressions include year dummies
^eUnderidentifcation test reports p value of Kleibergen-Paap rk LM statistic
^fWeak identification test reports Kleibergen-Paap rk Wald F statistic
^gOveridentification test reports p value of Hansen J statistic
^hEndogeneity test shows probability that endogenous regressors can actually be treated as exogenous