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Fish processing Westman Islands
Photo: Workers at a fish processing plant, Westman Islands..

Immigrants Earn 8% Less Than Icelanders

Immigrants to Iceland earn on average 8% less than locals, according to a recent paper published by Statistics Iceland. The study, which controlled for factors such as gender and age, also showed that immigrants generally receive lower wages for their education than locals, irrespective of their education level.

For the period 2008-2017 immigrants had around 8% lower earnings on average than locals, after controlling for factors such as gender, age, education, family structure, and residence. “Correcting for these factors provides a clearer picture of the specific effect that background has on earnings,” the report summary reads.

Pay gap varies by occupation

The pay gap between immigrants and locals varied depending on occupation and education level. Locals were also found to earn more than immigrants in occupations where immigrants most commonly work. The conditional pay gap among cleaning staff and cafeteria assistants was 10%, while among assembling labourers it was 11%. The gap was 8% among childcare workers.

Nordic immigrants earn more

Immigrants’ earnings varied by their region of origin as well. Those from the Nordic countries were found to have higher earnings than immigrants from other regions. Immigrants from Western Europe had generally 4% lower earnings than immigrants from the Nordic countries, while those from Eastern Europe had 6% lower earnings. Immigrants from Asia had the lowest earnings of the group, 7% lower on average than Nordic immigrants.

Immigrants who arrived in Iceland 6 to 9 years ago had 2% higher earnings than those who stayed in Iceland for 5 years or less, and those who had been residents for more than 10 years had 3% higher earnings on average.

The study defined immigrants as individuals born outside of Iceland, whose parents and grandparents are also born abroad. Locals were defined as everyone outside that group. The study was based on 215,000 observations of earnings by background between 2008 and 2017.

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