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Do Immigrants Affect Firm-Specific Wages?

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Author Info

  • Malchow-Møller, Nikolaj

    ()
    (University of Southern Denmark)

  • Munch, Jakob R.

    ()
    (University of Copenhagen)

  • Skaksen, Jan Rose

    ()
    (Copenhagen Business School)

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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Bibliographic 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:
Publication status: published in: Scandinavian Journal of Economics, 2012, 114 (4), 1267-1295
Handle: RePEc:iza:izadps:dp3264

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

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References

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Cited by:
  1. Nikolaj Malchow-Møller & Jakob Roland Munch & Claus Aastrup Seidelin & Jan Rose Skaksen, 2013. "Immigrant Workers and Farm Performance: Evidence from Matched Employer-Employee Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 95(4), pages 819-841.
  2. Cristina Mitaritonna & Gianluca Orefice & Giovanni Peri, 2014. "Immigrants and Firms' Productivity: Evidence from France," Working Papers 2014-09, CEPII research center.
  3. Julie L. Hotchkiss & Myriam Quispe-Agnoli & Fernando Rios-Avila, 2012. "The wage impact of undocumented workers," Working Paper, Federal Reserve Bank of Atlanta 2012-04, Federal Reserve Bank of Atlanta.

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