Do Immigrants Affect Firm-Specific Wages?

Nikolaj Malchow-Møller, Jakob Munch and Jan Skaksen

No 3264, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we propose and test a novel effect of immigration on the wages of native workers. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, the use of immigrants may also affect wage formation at the most disaggregate level – the workplace. Using linked employer-employee data, we find that an increased use of workers from less developed countries has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and IV. Additional evidence suggests that this effect works at least partly through a general effect on the wage norm in the firm of hiring employees with poor outside options (the immigrants).

Keywords: outside options; firm-specific wages; immigration (search for similar items in EconPapers)
JEL-codes: F22 J31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-12
New Economics Papers: this item is included in nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Scandinavian Journal of Economics, 2012, 114 (4), 1267-1295

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Related works:
Journal Article: Do Immigrants Affect Firm-Specific Wages? (2012)
Working Paper: Do Immigrants Affect Firm-Specific Wages? (2009)
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