Institutional diversity and the immigrant wage gap ? A comparison between the German and British experience with statutory minimum wages

This article exploits the introduction of a sectoral minimum wage in the German construction industry and the National Minimum Wage (NMW) in the UK to examine the influence of minimum wages on the immigrant wage gap in two sectors with a large population of immigrant worker and varying wage-setting environments. Our results suggest that minimum wage reform may reduce the wage gap between immigrants and natives in liberal market economies where wage-setting arrangements are largely decentralized. As anticipated, this effect appears to be confined at the bottom end of the wage distribution with no apparent spill-over effects higher in the wage distribution.