Working Paper: CEPR ID: DP3477
Authors: Gil S Epstein; Astrid Kunze; Melanie Ward
Abstract: The design of optimal immigration policy, particularly in the face of the spiraling demand for highly skilled workers, such as IT workers and engineers, is a topical issue in the policy debate as well as the economic literature. In this paper, we present empirical evidence from firm-level data collected in 2000 on the demand in Europe for highly skilled workers in general and abroad and their determinants. Major findings are that the fraction of highly skilled recruited from the international labour market is very small, and it seems that foreign and domestic workers are very similar in terms of formal education, that is subject of specialization, and job characteristics. We suggest an efficiency wage model that can explain why firms recruit foreign workers in small numbers and are willing to pay migrants the same wage as local workers and at the same time are willing to pay for moving costs, for example, that are specific to immigrating workers.
Keywords: firm data; globalization; highly skilled workers; labour demand; migration
JEL Codes: F22; J41; J61; L20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hiring foreign workers (J68) | Increase in domestic workers' effort (J29) |
| Hiring foreign workers (J68) | Domestic workers feel replaceable (J63) |
| Domestic workers feeling replaceable (J63) | Increase in domestic workers' effort (J29) |