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Immigration and two-component unemployment

Author

Listed:
  • Albert, Max
  • Meckl, Jürgen

Abstract

We analyze the employment effects of immigration within a model that accounts for several stylized facts of the German labor market. The co-existence of positive wage spans and unemployment is explained by wage rigidities that are simultaneously caused by effciency-wage setting and minimum wages. The observed positive relation between wage spans and minimum wages results from employment shifts from low-wage to high-wage sectors. Employment effects of immigration are opposite to those of a rise in the minimum wage. For plausible parameter values, immigration raises employment of the home labor force even if all immigrants find employment.

Suggested Citation

  • Albert, Max & Meckl, Jürgen, 2002. "Immigration and two-component unemployment," Dresden Discussion Paper Series in Economics 04/02, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    • Handle: RePEc:zbw:tuddps:0402
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    More about this item

    Keywords

    immigration; unemployment; effciency wage; wage drift; wage span;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • 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
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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