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Migration and wage-setting: reassessing the labor market effects of migration

Herbert Brücker and Elke Jahn

No 1502, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: This paper employs a wage-setting approach to analyze the labor market effects of immigration into Germany. The wage-setting framework relies on the assumption that wages tend to decline with the unemployment rate, albeit imperfectly. This enables us to consider labor market rigidities, which are particularly relevant in Europe. We find that the elasticity of the wage-setting curve is particularly high for young and well-educated workers. The labor market effects of immigration are moderate: a 1 percent increase in the German labor force through immigration increases the unemployment rate by less than 0.1 percentage points and reduces wages by 0.1 percent.

Keywords: Migration; wage-setting; labor markets; panel data (search for similar items in EconPapers)
JEL-codes: F22 J31 J61 (search for similar items in EconPapers)
Date: 2009
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Related works:
Journal Article: Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration (2011) Downloads
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:ifwkwp:1502

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