The effects of noncognitive skills on the native–migrant wage gap

Abstract Wage gaps between natives and immigrants are persistent, and human capital factors have only been able to explain part of this gap. Policymakers need to identify all potential sources of this gap to design active labor market policies that aim to improve the integration of immigrants. Are there differences in noncognitive skills between natives and immigrants that explain part of the native–immigrant wage gap? Using data from the German Socio-Economic Panel survey, I find that natives and first-generation immigrants significantly differ in noncognitive skills (Big Five personality traits, locus of control, reciprocity, and life goals). Immigrants outperform natives regarding life goals, including the importance of success, but underperform in terms of external locus of control (the belief that success depends on luck) and emotional stability. Immigrants’ skills are stable during their stay in the country. I conclude that differences in the Big Five personality traits and locus of control explain 19 and 13 per cent of the wage gap for males and females, respectively, while life goals decrease by 10 and 6 per cent. For comparison, human capital variables explain 39 and 13 per cent of the wage gap for men and women, respectively.