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Do Immigrants Affect Firm-Specific Wages?

  • Malchow-Møller, Nikolaj

    ()

    (University of Southern Denmark)

  • Munch, Jakob R.

    ()

    (University of Copenhagen)

  • Skaksen, Jan Rose

    ()

    (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 employer-employee 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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3264.

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Length: 35 pages
Date of creation: Dec 2007
Date of revision:
Publication status: published in: Scandinavian Journal of Economics, 2012, 114 (4), 1267-1295
Handle: RePEc:iza:izadps:dp3264
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