Wage Inequality and Immigration: Western-Europe in the Sixties

Nathalie Chusseau, Michel Dumont, Joel Hellier (), Glenn Rayp and Peter Willemé

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: We analyse the immigration flows to Western Europe in the sixties. We develop a theoretical model tailored to account for some of the key features of this period, i.e., trade in manufacturing that essentially involved advanced countries, the growing administration of labour markets in Western Europe and the huge inflow of low skilled immigrants from the South (less advanced countries) into Western Europe. Two propositions are subsequently derived from this model. First, the immigration flow increases with the skill premium in the country of destination. Second, for a given skill premium, immigration is an increasing function of both the host country’s working population and its relative endowment in skilled labour. The first proposition reflects a demand side effect that diverges from the result of the traditional self-selecting approach to migration, i.e., that a higher skill premium in the country of destination tends to discourage potential low-skilled migrants. Estimations implemented for a panel of four European countries (Belgium, France, Sweden and West Germany) over the period 1960-1975 corroborate to a large extent our propositions. We also find that none of the supply determinants are individually significant at equilibrium. These results confirm the hypothesis that immigration to Western Europe in the sixties was primarily demand driven.

Keywords: Immigration; International Division of Labour; Wage Inequality (search for similar items in EconPapers)
JEL-codes: F22 J31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-06
New Economics Papers: this item is included in nep-int, nep-lab and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:07/471

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