Working Paper: NBER ID: w13851
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 labor market were as 'flexible' as the UK labor market, it would be more efficient in dealing with the effects of immigration.
Keywords: immigration; labor market; Germany; employment; 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 |
|---|---|
| Substantial immigration during the 1990s (K37) | No adverse effects on native wages and employment levels (F66) |
| Substantial immigration during the 1990s (K37) | Crowding-out effect among immigrant groups (J69) |
| New immigrants (K37) | Reduction of average wages of long-term immigrants (J69) |
| Highly educated long-term immigrants (J61) | Loss of wages due to new immigrants (K37) |
| Imperfect substitutability between natives and immigrants (J69) | Minimal impact on native wages (F66) |
| Rigidities in the German labor market (J48) | Exacerbated negative employment effects on old immigrants (J68) |
| More flexible labor market (J29) | Better absorption of effects of immigration (K37) |