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Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia

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  • Kalckreuth, Ulf von

Abstract

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.

Suggested Citation

  • Kalckreuth, Ulf von, 2000. "Ethnic Dualism and Communication Costs – Explaining Segmentation and Wage Inertia," Discussion Papers 593, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
  • Handle: RePEc:mnh:vpaper:1018
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    File URL: https://ub-madoc.bib.uni-mannheim.de/1018/1/593.pdf
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    References listed on IDEAS

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    1. 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 818-827, September.
    2. Pischke, J.S. & Velling, J., 1994. "Wages and Employment Effects of Immigration to Germany: An Analysis Based on Local Labor Markets," Working papers 94-08, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. De New, John P & Zimmermann, Klaus F, 1994. "Native Wage Impacts of Foreign Labor: A Random Effects Panel Analysis," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(2), pages 177-192.
    4. 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.
    5. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, May.
    6. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
    7. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    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 1738-1772, December.
    9. 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.
    10. 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.
    11. 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).
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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