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Do Immigrants Affect Firm-Specific Wages?

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Author Info
Nikolaj Malchow-Møller () (CEBR and University of Southern Denmark)
Jakob Roland Munch () (University of Copenhagen, CEBR and EPRU)
Jan Rose Skaksen () (Copenhagen Business School, CEBR and IZA)

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Abstract

In this paper, we propose and test a novel effect of immigration on the wages of native workers. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, the use of immigrants may also affect wage formation at the most disaggregate level - the workplace. Using linked employer-employee data, we find that an increased use of workers from less developed countries has a significantly negative effect on the wages of native workers at the workplace - also when controlling for potential endogeneity of the immigrant share using both fixed effects and IV. Additional evidence suggests that this effect works at least partly through a general effect on the wage norm in the firm of hiring employees with poor outside options (the immigrants).

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3264.

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Length: 35 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3264

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Related research
Keywords: immigration; firm-specific wages; outside options;

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Find related papers by JEL classification:
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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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
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