Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. This disparity reflects both lower wages at entry and lower wage growth. Using linked employer-employee data, we show that 40 percent of the native-immigrant wage gap is explained by...

This paper examines the impact of performance-related pay on wage differentials within firms. Our theoretical framework predicts that, compared to a fixed pay system, pay schemes based on individual output increase within-firm wage inequality, while group-based bonuses have minor effects on wage...