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Do Immigrants Affect Firm-Specific Wages?

  • Malchow-Møller, Nikolaj

    (Department of Economics, Copenhagen Business School)

  • Munch, Jakob Roland

    (Department of Economics, Copenhagen Business School)

  • Rose Skaksen, Jan

    (Department of Economics, Copenhagen Business School)

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://openarchive.cbs.dk/cbsweb/handle/10398/7665
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Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 07-2008.

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Length: 35 pages
Date of creation: 01 Jan 2009
Date of revision:
Handle: RePEc:hhs:cbsnow:2008_007
Contact details of provider: Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 34 99
Web page: http://www.cbs.dk/departments/econ/
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