Inside Jobs: Salary Setting for Immigrants Crossing Establishment, Organizational, and National Boundaries

Abstract

Using novel US Department of Labor administrative records, the authors test theoretical mechanisms to account for variation in immigrant workers’ starting salaries following key career transitions. Specifically, they examine differences in the base starting salaries and discretionary starting salary increases above these base starting salaries for 1) same-establishment hires, relative to 2) US-based establishment transfers, 3) international establishment transfers, 4) US-based external hires, and 5) international external hires. In support of the “insider premium” account, findings show that same-establishment hires tend to work in jobs with greater requirements, and thus higher base starting salaries. In partial support of the “outsider premium” account, findings show that US-based external hires receive larger starting salary increases than do same-establishment hires, conditional on the jobs they enter. This said, international external hires receive smaller starting salary increases than do same-establishment hires. Findings reveal distinct mechanisms, acting separately or in tandem, during salary-setting processes.