Abstract
Immigrants and their native-born children often face considerable wage penalties relative to natives, but less is known about whether this inequality arises through differences in educational qualifications, unequal sorting across occupations, and establishments, or differential pay for the same work. Using linked employer–employee data from Norway, we ask (a) whether immigrant–native wage gaps reflect in differences in education, sorting, or within-job pay, (b) whether wage gaps differ by immigrant generation, and (c) whether wage gaps vary across different segments of the labor market. We find that immigrant–native wage inequality primarily reflects sorting into lower-paying jobs and wage gaps are considerably reduced across immigrant generations. When doing the same work for the same employer, immigrant-background workers, especially children of immigrants, earn similar wages to natives. Sorting into jobs seems more meritocratic for university graduates, professionals, and in the public sector, but within-job pay differentials are strikingly similar across market segments.