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Migration and Wage-Setting: Reassessing the Labor Market Effects of Migration

  • Herbert Brücker
  • Elke J. Jahn

This paper employs a wage-setting approach to analyze the labor market effects of immigration into Germany. The wage-setting framework relies on the assumption that wages tend to decline with the unemployment rate, albeit imperfectly. This enables us to consider labor market rigidities, which are particularly relevant in Europe. We find that the elasticity of the wage-setting curve is particularly high for young and well-educated workers. The labor market effects of immigration are moderate: a 1 percent increase in the German labor force through immigration increases the unemployment rate by less than 0.1 percentage points and reduces wages by 0.1 percent

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File URL: https://www.ifw-members.ifw-kiel.de/publications/migration-and-wage-setting-reassessing-the-labor-market-effects-of-migration/BruckerFinal.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1502.

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Length: 43 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:kie:kieliw:1502
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  4. D'Amuri, Francesco & Ottaviano, Gianmarco & Peri, Giovanni, 2008. "The labour market impact of immigration in Western Germany in the 1990's," ISER Working Paper Series 2008-17, Institute for Social and Economic Research.
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  18. Abdurrahman Aydemir & George J. Borjas, 2010. "Attenuation Bias in Measuring the Wage Impact of Immigration," NBER Working Papers 16229, National Bureau of Economic Research, Inc.
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  24. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2007. "Phillips Curve or wage curve? : evidence from West Germany: 1980-2004," IAB Discussion Paper 200714, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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  26. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2008. "Imperfect Substitution between Immigrants and Natives: A Reappraisal," NBER Working Papers 13887, National Bureau of Economic Research, Inc.
  27. David Card & Thomas Lemieux, 2000. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," NBER Working Papers 7655, National Bureau of Economic Research, Inc.
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  30. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
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