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Migration and the Wage-Settings Curve: Reassessing the Labor Market Effects of Migration

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Author Info

  • Brücker, Herbert

    ()
    (University of Bamberg)

  • Jahn, Elke J.

    ()
    (Department of Economics, Aarhus School of Business)

Abstract

In this paper we examine the labor market effects of migration in Germany on basis of a wage-setting curve. The wage-setting curve relies on the assumption that wages respond to a change in the un- employment rate, albeit imperfectly. This allows one to derive the wage and employment effects of migration simultaneously in a gen- eral equilibrium framework. Using administrative micro data we find that the elasticity of the wage-setting curve is particularly high for young workers and workers with an university degree, while it is low for older workers and workers with a vocational degree. The wage and employment effects of migration are moderate: a 1 percent increase in the German labor force through immigration increases the aggregate unemployment rate by less than 0.1 percentage points and reduces average wages by 0.1 percent in the short run. While native workers benefit from increased wages and lower unemployment, foreign work- ers are adversely affected.

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File URL: http://www.hha.dk/nat/wper/08-4_elja.pdf
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Bibliographic Info

Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 08-4.

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Length: 59 pages
Date of creation: 01 May 2008
Date of revision:
Handle: RePEc:hhs:aareco:2008_004

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Related research

Keywords: Migration; wage-setting curve; labor markets; panel data;

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  1. Ottaviano, Gianmarco Ireo Paolo & Peri, Giovanni, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the US," CEPR Discussion Papers 5226, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Elke J. Jahn, 2010. "Reassessing the Pay Gap for Temps in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(2), pages 208-233.
  2. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).

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