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Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia

  • Kalckreuth, Ulf von
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    What is the impact of international migration on the wage structure? Empirically, it is difficult to find any effect at all. This essay gives a new theoretical explanation for this conspicuous absence, emphasising non-convexities in the technology of individual firms due to communication costs. With high costs of coordination between workers, the labour force will segregate on the workshop level. In this case, the aggregate production technology has linear segments, and within certain bounds, additional labour input is absorbed without changing the relative factor prices. A local non-substitution theorem is derived.

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    File URL: https://ub-madoc.bib.uni-mannheim.de/1018/1/593.pdf
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    Paper provided by Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre in its series Discussion Papers with number 593.

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    Date of creation: 2000
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    Handle: RePEc:mnh:vpaper:1018
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    Web page: http://www.vwl.uni-mannheim.de/institut/
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    1. repec:cup:cbooks:9780521314985 is not listed on IDEAS
    2. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 201-234 National Bureau of Economic Research, Inc.
    3. Grossman, Jean Baldwin, 1982. "The Substitutability of Natives and Immigrants in Production," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 596-603, November.
    4. Bauer, Thomas K. & Zimmermann, Klaus F., 1999. "Report No. 3: Assessment of Possible Migration Pressure and its Labour Market Impact Following EU Enlargement to Central and Eastern Europe," IZA Research Reports 3, Institute for the Study of Labor (IZA).
    5. Pischke, Jörn-Steffen & Velling, Johannes, 1994. "Wage and Employment Effects of Immigration to Germany: An Analysis Based on Local Labour Markets," CEPR Discussion Papers 935, C.E.P.R. Discussion Papers.
    6. McManus, Walter S, 1985. "Labor Market Costs of Language Disparity: An Interpretation of Hispanic Earnings Differences," American Economic Review, American Economic Association, vol. 75(4), pages 818-27, September.
    7. Edward P. Lazear, 1995. "Culture and Language," NBER Working Papers 5249, National Bureau of Economic Research, Inc.
    8. Greenwood, Michael J & McDowell, John M, 1986. "The Factor Market Consequences of U.S. Immigration," Journal of Economic Literature, American Economic Association, vol. 24(4), pages 1738-72, December.
    9. Zimmermann, Klaus F, 1993. "Native Wage Impacts of Foreign Labour: A Random Effects Panel Analysis," CEPR Discussion Papers 851, C.E.P.R. Discussion Papers.
    10. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
    11. Walter S. McManus, 1990. "Labor Market Effects of Language Enclaves: Hispanic Men in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 228-252.
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