Wage and employment effects of immigration to Germany: an analysis based on local labor markets
AbstractWe analyze the impact of increased immigration on labor market outcomes of natives in Germany using a dataset of county level variables for the late 1908s. In order to construct more unified labor market regions we aggregate the 328 counties to 167 larger regions. We study two measures of immigration, the change in the share of foreigners between 1985 and 1989 as well as one year gross and net flows of immigrants to an area. In order to address the potential problem of immigrant selection into local labor markets with superior performance we instrument the change in the foreign share by its previous level. Especially for unemployment we find large effects of an increased foreign share. We conjecture that these results might be spurious. Foreigners tend to be concentrated in lower unemployment areas but unemployment tends to be mean reverting during the boom period we study. This leads to a positive correlation between the instrument and the change in unemployment. Taking account of the mean reversion in unemployment we find no detrimental effect of immigration. Similar results are obtained on the basis of one year flow data of foreigners. We also find no support for the hypothesis that the absence of displacement effects are due to a response of native migration patterns. The initial settlement of immigrants in Germany is largely independent of labor market conditions. Subsequent internal moves by foreigners are more responsive to local unemployment albeit much less than internal migration of natives. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 94-03.
Date of creation: 1994
Date of revision:
Other versions of this item:
- Pischke, J.S. & Velling, J., 1994. "Wages and Employment Effects of Immigration to Germany: An Analysis Based on Local Labor Markets," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-08, Massachusetts Institute of Technology (MIT), Department of Economics.
- Pischke, Jörn-Steffen & Velling, Johannes, 1994. "Wage and Employment Effects of Immigration to Germany: An Analysis Based on Local Labour Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 935, C.E.P.R. Discussion Papers.
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
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- John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
- Kalckreuth, Ulf von, 2000. "Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia," Discussion Papers, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre 593, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
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- Sari Pekkala Kerr & William R. Kerr, 2011.
"Economic Impacts of Immigration: A Survey,"
NBER Working Papers
16736, National Bureau of Economic Research, Inc.
- Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," Finnish Economic Papers, Finnish Economic Association, Finnish Economic Association, vol. 24(1), pages 1-32, Spring.
- Sari Pekkala, 2005. "Economic Impacts of Immigration: A Survey," Discussion Papers, Government Institute for Economic Research Finland (VATT) 362, Government Institute for Economic Research Finland (VATT).
- Antje Mertens & Anette Haas, 2005. "Regional Unemployment and Job Switches in Germany – An Analysis at District Level," ERSA conference papers ersa05p592, European Regional Science Association.
- Thomas Bauer, 1998. "Do Immigrants Reduce Natives' Wages? Evidence from Germany," Departmental Working Papers, Rutgers University, Department of Economics 199802, Rutgers University, Department of Economics.
- Zweimuller, Josef & Winter-Ebmer, Rudolf, 1995. "Internal labor markets and firm-specific determination of earnings in the presence of immigrant workers," Economics Letters, Elsevier, Elsevier, vol. 48(2), pages 185-191, May.
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