High Unemployment in Germany: Why do Foreigners Suffer Most?
AbstractIn Germany, immigrant unemployment is not only higher than native unemployment; italso reacts more to changes in the situation on the labor market. Decomposing the gapbetween native and immigrant unemployment into a baseline and a labor-marketsituation component, I find that the unemployment rate of immigrants would lie at 5.6 percentagepoints for zero native unemployment (the baseline component of the gap). Anincrease in overall unemployment by 1 percentage point leads to a 0.7 percentage pointshigher increase in immigrant unemployment than in native unemployment (the situationcomponent). The large part of this difference, about 3/4 of the baseline and 4/5 of thesituation component, can be explained by differences in the endowments with classicalhuman capital (educational degrees and experience) between immigrants and natives.Also controlling for country-specific human capital, particularly language skills, thesituation component becomes insignificant and the baseline effect again decreases by1/2. Adding controls for social networks, the baseline effect also becomes insignificant.Thus, human capital and social networks can possibly fully explain the differencebetween native and immigrant unemployment in Germany.
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Bibliographic InfoPaper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper Nr. 90.
Date of creation: 2010
Date of revision:
Immigration; integration; unemployment; human capital; language skills; discrimination; social networks;
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
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