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Migration and the Wage-Settings Curve: Reassessing the Labor Market Effects of Migration

Author

Listed:
  • Brücker, Herbert

    () (University of Bamberg)

  • Jahn, Elke J.

    () (Department of Economics, Aarhus School of Business)

Abstract

In this paper we examine the labor market effects of migration in Germany on basis of a wage-setting curve. The wage-setting curve relies on the assumption that wages respond to a change in the un- employment rate, albeit imperfectly. This allows one to derive the wage and employment effects of migration simultaneously in a gen- eral equilibrium framework. Using administrative micro data we find that the elasticity of the wage-setting curve is particularly high for young workers and workers with an 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 0.1 percent in the short run. While native workers benefit from increased wages and lower unemployment, foreign work- ers are adversely affected.

Suggested Citation

  • Brücker, Herbert & Jahn, Elke J., 2008. "Migration and the Wage-Settings Curve: Reassessing the Labor Market Effects of Migration," Working Papers 08-4, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2008_004
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    File URL: http://www.hha.dk/nat/wper/08-4_elja.pdf
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    References listed on IDEAS

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    1. Gianmarco I.P. Ottaviano & Giovanni Peri, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," NBER Working Papers 11672, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jahn Elke J., 2010. "Reassessing the Pay Gap for Temps in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(2), pages 208-233, April.
    2. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Migration; wage-setting curve; labor markets; panel data;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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