Kiel Working Papers, Kiel Institute for World Economics
No 1502:
Migration and Wage-Setting: Reassessing the Labor Market Effects of Migration
Herbert Brücker and Elke J. Jahn
Abstract: This paper employs a wage-setting approach to analyze the
labor market effects of immigration into Germany. The wage-setting
framework relies on the assumption that wages tend to decline with the
unemployment rate, albeit imperfectly. This enables us to consider labor
market rigidities, which are particularly relevant in Europe. We find that
the elasticity of the wage-setting curve is particularly high for young and
well-educated workers. The labor market effects of immigration are
moderate: a 1 percent increase in the German labor force through
immigration increases the unemployment rate by less than 0.1 percentage
points and reduces wages by 0.1 percent
Keywords: Migration, wage-setting, labor markets, panel data; (follow links to similar papers)
JEL-Codes: F22,; J31,; J61; (follow links to similar papers)
43 pages, March 2009
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