Problem or Opportunity? Immigration, Job Search, Entrepreneurship and Labor Market Outcomes Of Natives in Germany

Zainab Iftikhar () and Anna Zaharieva

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper evaluates the effects of low-skill immigration on small businesses, wages, and employment in Germany. We develop a search and matching model with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using data from the German SocioEconomic Panel (SOEP). Quantitative analysis shows that low-skill immigration increases the welfare of high-skill workers. It also leads to the endogenous expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. However, the gains are outweighed by the losses in welfare of low-skill workers, and overall, there is a marginal loss of per-worker welfare to the economy. Policies restricting immigrant entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups.

Keywords: entrepreneurship; small business; self-employment; search frictions; immigration (search for similar items in EconPapers)
JEL-codes: J23 J31 J61 J64 L26 (search for similar items in EconPapers)
Pages: 57
Date: 2025-11
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-eur, nep-lab, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp714 (application/pdf)

Related works:
Working Paper: Problem or Opportunity? Immigration, Job Search, Entrepreneurship and Labor Market Outcomes of Natives in Germany (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2025_714

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().