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Is there monopsonistic discrimination against immigrants? First evidence from linked employer-employee data

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  • Hirsch, Boris
  • Jahn, Elke J.

Abstract

This paper investigates immigrants' and natives' labour supply to the firm within a semi-structural approach based on a dynamic monopsony framework. Applying duration models to a large administrative employer-employee data set for Germany, we find that once accounting for unobserved worker heterogeneity immi-grants supply labour less elastically to firms than natives. Under monopsonistic wage setting the estimated elasticity differential predicts a 4.7 log points wage penalty for immigrants thereby accounting for almost the entire unexplained native-immigrant wage differential of 2.9-5.9 log points. Our results imply that employers profit from discriminating against immigrants.

Suggested Citation

  • Hirsch, Boris & Jahn, Elke J., 2012. "Is there monopsonistic discrimination against immigrants? First evidence from linked employer-employee data," Discussion Papers 79, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  • Handle: RePEc:zbw:faulre:79
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    Cited by:

    1. repec:bla:labour:v:31:y:2017:i:2:p:105-126 is not listed on IDEAS
    2. Kuhn, Peter J. & Shen, Kailing, 2014. "Do Employers Prefer Undocumented Workers? Evidence from China's Hukou System," IZA Discussion Papers 8289, Institute for the Study of Labor (IZA).
    3. repec:ipg:wpaper:2014-069 is not listed on IDEAS
    4. Strobl, Eric & Walsh, Frank, 2016. "Monopsony, minimum wages and migration," Labour Economics, Elsevier, vol. 42(C), pages 221-237.
    5. Nanos, Panagiotis & Schluter, Christian, 2014. "The composition of wage differentials between migrants and natives," European Economic Review, Elsevier, vol. 65(C), pages 23-44.
    6. Briggs Depew & Peter Norlander & Todd A. Sørensen, 2017. "Inter-firm mobility and return migration patterns of skilled guest workers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 681-721, April.
    7. de la Rica, Sara & Glitz, Albrecht & Ortega, Francesc, 2013. "Immigration in Europe: Trends, Policies and Empirical Evidence," IZA Discussion Papers 7778, Institute for the Study of Labor (IZA).
    8. Hirsch, Boris & Jahn, Elke J. & Schnabel, Claus, 2013. "The Cyclical Behaviour of Employers' Monopsony Power and Workers' Wages," IZA Discussion Papers 7776, Institute for the Study of Labor (IZA).
    9. Helmut Hofer & Gerlinde Titelbach & Rudolf Winter-Ebmer & Alexander Ahammer, 2017. "Wage Discrimination Against Immigrants in Austria?," LABOUR, CEIS, vol. 31(2), pages 105-126, June.

    More about this item

    Keywords

    monopsony; native-immigrant wage differential; discrimination; Germany;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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