Is There Monopsonistic Discrimination against Immigrants? First Evidence from Linked Employer-Employee Data

Boris Hirsch and Elke Jahn

No 6472, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates immigrants' and natives' labour supply to the firm within a semi-structural approach based on a dynamic monopsony framework. Applying duration models to a large administrative employer–employee data set for Germany, we find that once accounting for unobserved worker heterogeneity immigrants supply labour less elastically to firms than natives. Under monopsonistic wage setting the estimated elasticity differential predicts a 4.7 log points wage penalty for immigrants thereby accounting for almost the entire unexplained native-immigrant wage differential of 2.9-5.9 log points. Our results imply that discriminating against immigrants is profitable rather than costly.

Keywords: monopsony; native-immigrant wage differential; Germany; discrimination (search for similar items in EconPapers)
JEL-codes: J42 J61 J71 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-04
New Economics Papers: this item is included in nep-lab, nep-lma and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - substantially revised version published in: Industrial and Labor Relations Review, 2015, 68 (3), 501-528

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Related works:
Working Paper: Is there monopsonistic discrimination against immigrants? First evidence from linked employer-employee data (2012)
Working Paper: Is there monopsonistic discrimination against immigrants? First evidence from linked employer employee data (2012)
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