Do Immigrants Affect Firm-Specific Wages?

35 Pages Posted: 3 Nov 2008

See all articles by Nikolaj Malchow-Moeller

Nikolaj Malchow-Moeller

Copenhagen Business School - Center for Economic and Business Research (CEBR); University of Southern Denmark

Jakob Roland Munch

University of Copenhagen - Department of Economics; Center for Economic and Business Research (CEBR)

Jan Rose Skaksen

Copenhagen Business School - Department of Economics; IZA Institute of Labor Economics

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: immigration, firm-specific wages, outside options

JEL Classification: F22, J31

Suggested Citation

Malchow-Moeller, Nikolaj and Munch, Jakob Roland and Skaksen, Jan Rose, Do Immigrants Affect Firm-Specific Wages?. IZA Discussion Paper No. 3264. Available at SSRN: https://ssrn.com/abstract=1294514 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Nikolaj Malchow-Moeller (Contact Author)

Copenhagen Business School - Center for Economic and Business Research (CEBR) ( email )

Solbjerg Plads 3
Copenhagen, DK-2000
Denmark

University of Southern Denmark

Campusvej 55
DK-5230 Odense, 5000
Denmark

Jakob Roland Munch

University of Copenhagen - Department of Economics ( email )

Ă˜ster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 35323019 (Phone)
+45 35323000 (Fax)

HOME PAGE: http://www.econ.ku.dk/Faculty_And_Staff/showID.asp?profile_id=1260

Center for Economic and Business Research (CEBR)

Porcelaenshaven, Bldg 65
DK-2000 Frederiksberg
Denmark

Jan Rose Skaksen

Copenhagen Business School - Department of Economics ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark
+45 38152582 (Phone)
+45 3815 2576 (Fax)

HOME PAGE: http://old.cbs.dk/staff/janroseskaksen/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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