THE VALUE OF HOLDING AN AMERICAN PASSPORT: WHY DO NON-US CITIZENS EARN LESS THAN US CITIZENS?

Abstract

This paper examines the income gap between US citizens and non-US citizens of second-generation immigrants living in Metropolitan New York area, where non-US citizens earn significantly less than US citizens. After controlling by regression for employment status, labor supply, years of experience, demographic characteristics, race, highest educational attainment, ability, employer type, occupation, nature of major job task and labor union membership, non-US citizens still earn 13.9% less than US citizens. A series of Oaxaca-Blinder decompositions on the income gap between US citizens and non-US citizens by race, gender, employment status, labor union membership, education and occupation reveals that this income gap is not constant across groups. There is a significant unexplained difference in the income gap by citizenship for Asian respondents (but not white, Hispanic or Black respondents), for female respondents (but not for male respondents), for respondents working part-time (but not for respondents working fulltime), for non-unionized workers (but not for unionized workers). However, the unexplained difference in the wage gap by citizenship vanishes when comparing workers of the same educational level (except for workers with only up to some college education) and occupation. It reveals that educational level and occupation are important factors in explaining the wage gap by citizenship of second-generation immigrants in Metropolitan New York area.