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Migration and the Wage Curve: A Structural Approach to Measure the Wage and Employment Effects of Migration

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Author Info

  • Brücker, Herbert

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Jahn, Elke J.

    ()
    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Based on a wage curve approach we examine the labor market effects of migration in Germany. The wage curve relies on the assumption that wages respond to a change in the unemployment rate, albeit imperfectly. This allows one to derive the wage and employment effects of migration simultaneously in a general equilibrium framework. For the empirical analysis we employ the IABS, a two percent sample of the German labor force. We find that the elasticity of the wage curve is particularly high for young workers and workers with a 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 less 0.1 percent. While native workers benefit from increased wages and lower unemployment, foreign workers are adversely affected.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3423.

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Length: 49 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3423

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Keywords: panel data; wage curve; labor demand; migration;

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References

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  1. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," Working Papers 2006.52, Fondazione Eni Enrico Mattei.
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Cited by:
  1. Hazans, Mihails & Philips, Kaia, 2011. "The Post-Enlargement Migration Experience in the Baltic Labor Markets," IZA Discussion Papers 5878, Institute for the Study of Labor (IZA).
  2. Steinhardt, Max Friedrich, 2009. "The wage impact of immigration in Germany: New evidence for skill groups and occupations," HWWI Research Papers 1-23, Hamburg Institute of International Economics (HWWI).
  3. Gabriel J. Felbermayr & Wido Geis & Wilhelm Kohler, 2008. "Restrictive Immigration Policy in Germany: Pains and Gains Foregone?," CESifo Working Paper Series 2316, CESifo Group Munich.
  4. Brücker, Herbert & Hauptmann, Andreas & Jahn, Elke J. & Upward, Richard, 2014. "Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK," European Economic Review, Elsevier, vol. 66(C), pages 205-225.
  5. Roland Aeppli & Martin Gassebner, 2008. "Auswirkungen der Personenfreizügigkeit auf die Schweiz," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 2(4), pages 23-34, December.
  6. Francesco D'Amuri & Gianmarco I.P. Ottaviano & Giovanni Peri, 2008. "The Labor Market Impact of Immigration in Western Germany in the 1990's," NBER Working Papers 13851, National Bureau of Economic Research, Inc.
  7. repec:ese:iserwp:2008-17 is not listed on IDEAS
  8. Carlos Villalobos Barría, 2012. "Internal Migration and its Impact on Reducing Inter-communal Disparities in Chile," Ibero America Institute for Econ. Research (IAI) Discussion Papers 220, Ibero-America Institute for Economic Research.
  9. Sona Kalantaryan, 2013. "Housing Market Responses to Immigration; Evidence from Italy," RSCAS Working Papers 2013/83, European University Institute.

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