Restrictive immigration policy in Germany: Pains and gains foregone?

Gabriel Felbermayr, Wido Geis-Thöne and Wilhelm K. Kohler

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: Many European countries restrict immigration from new EU member countries. The rationale is to avoid adverse wage and employment effects. We quantify these effects for Germany. Following Borjas (in Q J Econ CXVIII(4):1335-1374, 2003), we estimate a structural model of labor demand, based on elasticities of substitution between workers with different experience levels and education. We allow for unemployment which we model in a price-wage-setting framework. Simulating a counterfactual scenario without restrictions for migration from new EU members countries in Germany, we find moderate negative wage and employment effects for incumbent foreigners, but positive effects for natives. Our results indicate that for the native German population as a whole the immigration restrictions are not welfare enhancing.

Date: 2010
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Citations: View citations in EconPapers (51)

Published in Review of World Economics 1 146(2010): pp. 1-21

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Working Paper: Restrictive Immigration Policy in Germany: Pains and Gains Foregone? (2008)
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