Native Wage Impacts of Foreign Labour: A Random Effects Panel Analysis

Klaus Zimmermann ()

No 851, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Natives often fear that competition from foreigners in labour markets will cause wages to fall and unemployment to rise. These effects might actually be realized if natives and immigrants were substitutes. If they are complements, however, the result might be rather different. This paper outlines the issue in a framework with two types of labour, such that low-quality workers (natives and immigrants) are potential complements to high-quality (native) workers. It is hypothesized that this is a stylized description of the past West German immigration problem. Examining the wage functions of white and blue collar natives in a random effects panel model using a large sample of micro data, we find that foreigners have a negative effect on the wages of Germans as a whole. Relatively small gains are made by white collar employees with less than 20 years work experience, but these are outweighed by the larger negative effects experienced by blue collar employees.

Keywords: Earnings Function; Immigration; Random Effects Panel Models (search for similar items in EconPapers)
JEL-codes: C23 F22 J31 (search for similar items in EconPapers)
Date: 1993-11
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Citations: View citations in EconPapers (14)

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Journal Article: Native Wage Impacts of Foreign Labor: A Random Effects Panel Analysis (1994)
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