Immigration and two-component unemployment

Max Albert and Jürgen Meckl ()

No 04/02, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

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.

Keywords: immigration; unemployment; effciency wage; wage drift; wage span (search for similar items in EconPapers)
JEL-codes: F11 F22 J31 J64 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuddps:0402

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