Does the Ethnic Composition of Co-Workers Affect Wages?

RenÚ B÷heim 1, Karin Mayr2
1Johannes Kepler University, Austria, 2University of Vienna, Austria

We investigate the effect of the share of foreign co-workers on natives' wages. Using Austrian administrative data we examine the changes in the ethnic composition of co-workers on natives' wages controlling for worker- and firm-specific effects. A wage effect of foreign co-workers may exist because of an external effect on native productivity and, second, a compensating wage differential (if foreign co-workership represents a - negative or positive - job amenity). We can discriminate between the two by looking at whether the number of (lagged) job quits by natives decreases or increases in response to a change in the share of foreign co-workers.

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