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

  • Brücker, Herbert

    ()

    (University of Bamberg)

  • Jahn, Elke J.

    ()

    (Department of Economics, Aarhus School of Business)

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.

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File URL: http://www.hha.dk/nat/wper/08-4_elja.pdf
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 08-4.

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Length: 59 pages
Date of creation: 01 May 2008
Date of revision:
Handle: RePEc:hhs:aareco:2008_004
Contact details of provider: Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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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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