International Migration to Germany: A CGE-Analysis of Labour Market Impact

Herbert Brücker and Michael Kohlhaas

No 331276, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Although it is widely accepted that additional migration is needed to mitigate ageing, among the present Member States of the European Union (EU) concerns are widespread that free movement of labour for the accession countries will result in falling wages and increasing unemployment. This paper analyses the impact of migration on factor income and employment on basis of a computable general equilibrium model. The analysis is undertaken with a dynamic multi-regional CGE model of Germany and the rest of EU15. This model, called LEAN (Welsch, 1996), allows to represent labour markets with various degrees of wage rigidities in an open-economy framework. The focus is placed on different scenarios with regard to the scale of migration and the qualification of migrants. Simulation results are evaluated with respect to economic growth, employment, factor income, and the implicit distributive effects. The results show that even substantial levels of migration need not overstrain the adaptive capacity of the German labour market. A change of the structure of the qualification of migrants may pose more of a challenge. A higher share of highly qualified migrants could strain this relatively small labour market segment. A higher share of low-skilled workers could cause higher unemployment because this labour market segment is more rigid and additionally reduce the average productivity and GDP.

Keywords: Labor and Human Capital; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 19
Date: 2004
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Related works:
Working Paper: International Migration to Germany: A CGE-Analysis of Labour Market Impact (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331276

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