Native Wage Impacts of Foreign Labour: A Random Effects Panel Analysis
AbstractNatives often fear that competition from foreigners in labour markets will cause wages to fall and unemployment to rise. These effects might actually be realized if natives and immigrants were substitutes. If they are complements, however, the result might be rather different. This paper outlines the issue in a framework with two types of labour, such that low-quality workers (natives and immigrants) are potential complements to high-quality (native) workers. It is hypothesized that this is a stylized description of the past West German immigration problem. Examining the wage functions of white and blue collar natives in a random effects panel model using a large sample of micro data, we find that foreigners have a negative effect on the wages of Germans as a whole. Relatively small gains are made by white collar employees with less than 20 years work experience, but these are outweighed by the larger negative effects experienced by blue collar employees.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 851.
Date of creation: Nov 1993
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Other versions of this item:
- De New, John P & Zimmermann, Klaus F, 1994. "Native Wage Impacts of Foreign Labor: A Random Effects Panel Analysis," Journal of Population Economics, Springer, vol. 7(2), pages 177-92.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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