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Do Immigrants Affect Firm-Specific Wages?

  • Nikolaj Malchow-Møller
  • Jakob R. Munch
  • Jan Rose Skaksen

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 employeremployee 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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File URL: http://hdl.handle.net/10.1111/j.1467-9442.2012.01720.x
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Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 114 (2012)
Issue (Month): 4 (December)
Pages: 1267-1295

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Handle: RePEc:bla:scandj:v:114:y:2012:i:4:p:1267-1295
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