Working Paper: CEPR ID: DP6736
Authors: Francesco Damuri; Gianmarco I.P. Ottaviano; Giovanni Peri
Abstract: We adopt a general equilibrium approach in order to measure the effects of recent immigration on the Western German labor market, looking at both wage and employment effects. Using the Regional File of the IAB Employment Subsample for the period 1987-2001, we find that the substantial immigration of the 1990's had no adverse effects on native wages and employment levels. It had instead adverse employment and wage effects on previous waves of immigrants. This stems from the fact that, after controlling for education and experience levels, native and migrant workers appear to be imperfect substitutes whereas new and old immigrants exhibit perfect substitutability. Our analysis suggests that if the German labour market were as `flexible' as the UK labour market, it would be more efficient in dealing with the effects of immigration.
Keywords: employment; immigration; skill complementarities; wages
JEL Codes: E24; F22; J31; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor market flexibility (J48) | More efficient absorption of immigration shocks (J69) |
| Substantial immigration of the 1990s (K37) | No adverse effects on native wages and employment levels (F66) |
| Substantial immigration of the 1990s (K37) | Adverse effects on previous waves of immigrants (K37) |
| New immigrants (K37) | Negative employment effect on previous immigrants (J68) |
| New immigrants (K37) | Depress long-term immigrants' wages (J69) |
| New immigrants (K37) | Wage increase for medium-low education native workers (J39) |
| New immigrants (K37) | Wage decrease for high education native workers (J39) |