Migration and Wage‐Setting: Reassessing the Labor Market Effects of Migration

32 Pages Posted: 24 May 2011

See all articles by Herbert Brücker

Herbert Brücker

German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Elke J. Jahn

Institute for Employment Research (IAB); University of Bayreuth; IZA Institute of Labor Economics

Date Written: June 2011

Abstract

In this paper we employ a wage‐setting approach to analyze the labor market effects of immigration into Germany from 1980 to 2004. This enables us to consider labor market rigidities, which are prevalent in Europe. We find that the elasticity of the wage‐setting curve is particularly high for young workers. Moreover, natives and foreigners are imperfect substitutes. The wage and employment effects of immigration depend on the skill structure of the immigrant workforce. Because the foreign labor supply shift has mainly affected the high‐skilled labor market segment, the 4 percent increase of the workforce through immigration has not increased either aggregate or foreign unemployment.

Keywords: Immigration, wages, unemployment, Germany, panel data, F22, J31, J61

Suggested Citation

Brücker, Herbert and Jahn, Elke J., Migration and Wage‐Setting: Reassessing the Labor Market Effects of Migration (June 2011). Scandinavian Journal of Economics, Vol. 113, Issue 2, pp. 286-317, 2011, Available at SSRN: https://ssrn.com/abstract=1851185 or http://dx.doi.org/10.1111/j.1467-9442.2010.01634.x

Herbert Brücker (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Elke J. Jahn

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of Bayreuth ( email )

Bayreuth, 95447
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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