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Interacting product and labor market regulation and the impact of immigration on native wages

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  • Prantl, Susanne
  • Spitz-Oener, Alexandra

Abstract

Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across di erent segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We nd that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms.

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  • Prantl, Susanne & Spitz-Oener, Alexandra, 2014. "Interacting product and labor market regulation and the impact of immigration on native wages," SFB 649 Discussion Papers 2014-018, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2014-018
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    More about this item

    Keywords

    Immigration; Product Market Regulation; Labor Market Regulation;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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