Changes in the Czech Wage Structure: Does Immigration Matter?

We find that immigrant workers do not affect changes in the Czech wage structure between 2002 and 2006 despite their substantial inflows. Instead, using the Albrecht et al. (2003) version of the Machado and Mata (2005) decomposition technique along the wage distribution, we find that changes in the wage structure are explained solely by increasing returns of native workers. In particular, we provide evidence on increasing returns to education of native workers along the wage distribution. Next, we suggest that increasing wage dispersion is due to changes in the observed characteristics of native workers, such as a rising level of education, rather than due to immigration inflows. Finally, we find that the negative immigrant-native wage gaps seem persistent along the wage distribution and are explained mainly by differences in observed characteristics.