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Migration and the Wage Curve: A Structural Approach to Measure the Wage and Employment Effects of Migration

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  • Brücker, Herbert

    (Institute for Employment Research (IAB), Nuremberg)

  • Jahn, Elke J.

    (University of Bayreuth)

Abstract

Based on a wage curve approach we examine the labor market effects of migration in Germany. The wage curve relies on the assumption that wages respond to a change in the unemployment rate, albeit imperfectly. This allows one to derive the wage and employment effects of migration simultaneously in a general equilibrium framework. For the empirical analysis we employ the IABS, a two percent sample of the German labor force. We find that the elasticity of the wage curve is particularly high for young workers and workers with a university degree, while it is low for older workers and workers with a vocational degree. The wage and employment effects of migration are moderate: a 1 percent increase in the German labor force through immigration increases the aggregate unemployment rate by less than 0.1 percentage points and reduces average wages by less 0.1 percent. While native workers benefit from increased wages and lower unemployment, foreign workers are adversely affected.

Suggested Citation

  • Brücker, Herbert & Jahn, Elke J., 2008. "Migration and the Wage Curve: A Structural Approach to Measure the Wage and Employment Effects of Migration," IZA Discussion Papers 3423, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3423
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    1. Gianmarco I.P. Ottaviano & Giovanni Peri, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," NBER Working Papers 11672, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Steinhardt Max Friedrich, 2011. "The Wage Impact of Immigration in Germany - New Evidence for Skill Groups and Occupations," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-35, June.
    2. Michael Gerfin & Boris Kaiser, 2010. "The Effects of Immigration on Wages: An Application of the Structural Skill-Cell Approach," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(IV), pages 709-739, December.
    3. Francesco D’Amuri & Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The labor market impact of immigration in Western Germany in the 1990s," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 8, pages 223-243, World Scientific Publishing Co. Pte. Ltd..
    4. Brücker, Herbert & Hauptmann, Andreas & Jahn, Elke J. & Upward, Richard, 2014. "Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK," European Economic Review, Elsevier, vol. 66(C), pages 205-225.
    5. Baas, Timo & Brücker, Herbert & Hauptmann, Andreas, 2009. "EU-Osterweiterung: Positive Effekte durch Arbeitsmigration (EU eastern enlargement: Benefits from labour migration)," IAB-Kurzbericht 200909, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Schnellenbach Jan, 2008. "Rational Ignorance is not Bliss: When do Lazy Voters Learn from Decentralised Policy Experiments?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(4), pages 372-393, August.
    7. Gabriel Felbermayr & Wido Geis & Wilhelm Kohler, 2014. "Restrictive Immigration Policy in Germany: Pains and Gains Foregone?," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 12, pages 395-419, World Scientific Publishing Co. Pte. Ltd..
    8. Andrea Grabmayer & Andrea Hartmann & Maria Thalhammer, 2009. "Labour Mobility within the EU in the Context of Enlargement and the Functioning of the Transitional Arrangements," WIFO Studies, WIFO, number 35641, March.
    9. Carlos Villalobos Barría, 2012. "Internal Migration and its Impact on Reducing Inter-communal Disparities in Chile," Ibero America Institute for Econ. Research (IAI) Discussion Papers 220, Ibero-America Institute for Economic Research.
    10. Roland Aeppli & Martin Gassebner, 2008. "Auswirkungen der Personenfreizügigkeit auf die Schweiz," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 2(4), pages 23-34, December.
    11. Hazans, Mihails & Philips, Kaia, 2011. "The Post-Enlargement Migration Experience in the Baltic Labor Markets," IZA Discussion Papers 5878, Institute of Labor Economics (IZA).
    12. Daniel Heuermann, 2011. "Human Capital Externalities in Western Germany," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 139-165.
    13. Sona Kalantaryan, 2013. "Housing Market Responses to Immigration; Evidence from Italy," RSCAS Working Papers 2013/83, European University Institute.

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    More about this item

    Keywords

    labor demand; wage curve; panel data; migration;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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