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Migration and Wage-Setting: Reassessing the Labor Market Effects of Migration

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  • Herbert Brücker
  • Elke J. Jahn

Abstract

This paper employs a wage-setting approach to analyze the labor market effects of immigration into Germany. The wage-setting framework relies on the assumption that wages tend to decline with the unemployment rate, albeit imperfectly. This enables us to consider labor market rigidities, which are particularly relevant in Europe. We find that the elasticity of the wage-setting curve is particularly high for young and well-educated workers. The labor market effects of immigration are moderate: a 1 percent increase in the German labor force through immigration increases the unemployment rate by less than 0.1 percentage points and reduces wages by 0.1 percent

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File URL: https://www.ifw-members.ifw-kiel.de/publications/migration-and-wage-setting-reassessing-the-labor-market-effects-of-migration/BruckerFinal.pdf
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1502.

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Length: 43 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:kie:kieliw:1502

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

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