tives to underlying skill differentials. In particular, a great deal of evidence suggests that much of the wage differential between Hispanics and non-Hispanics is due to differences in observed socioeconomic characteristics, particularly education and English language proficiency. For example, Reimers (1983) found that differences in observed socioeconomic characteristics accounted for 27 of a 34 percentage point wage difference between white non-Hispanic men and men of Mexican ancestry. Her results indicated that, for men of Cuban ancestry, adjusting for observable differences more than accounted for the entire wage differential, whereas for "other Hispanic" men, observable characteristics accounted for roughly half of a 23 percent wage differential. McManus et al. (1983) found that there was no statistically significant difference in wages between non-Hispanic white men and Hispanic men who were proficient in English, once adjustments were made for other differences in socioeconomic characteristics. Similarly, Smith (1997) found that, after controlling for differences in education, geographic location, language, and time since immigration, there was little remaining wage difference between Hispanics and native-born whites. The evidence, therefore, is not consistent with the hypothesis that widespread labor market discrimination results in substantially reduced wages for immigrant Hispanic and Asian groups.
Our conclusion about the relatively minor role that discrimination plays in aggregate labor market outcomes of immigrants should not be misunderstood. In particular, it is not meant to deny that immigrants in their daily lives encounter many instances of verbal and nonverbal abuse. Such abuse occurs with far too great frequency, and it stings. The import of our conclusion is that discriminatory actions of this kind do not lead to a significant wage penalty in the labor market.
To sum up, most immigrants who come to the United States enjoy substantial economic benefits, in that wages are considerably higher here than in their home countries. There is a great deal of diversity among immigrants in their incomes in the United States. For both male and female immigrants, the lowest wages are received by recent immigrants and by immigrants from Mexico, Central America, and South America. The size of the wage gap between recent immigrants and natives has widened substantially in recent years. Finally, there appears to be little evidence of substantial wage discrimination against immigrants.
We have argued in this volume that the skill composition of immigrants helps determine the distributional impact of immigration on the employment opportunities of native-born workers. In Chapters 6 and 7, we argue that it also helps determine expenditures in social insurance programs. Trends in the skills of immigrants relative to those of the native-born are important because they help us answer another critical question: How successful are immigrants in assimilating