Interacting Product and Labor Market Regulation and the Impact of Immigration on Native Wages

64 Pages Posted: 18 Jan 2014

See all articles by Susanne Prantl

Susanne Prantl

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Alexandra Spitz-Oener

Humboldt University of Berlin; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Abstract

Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers.We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms.

Keywords: immigration, product market regulation, labor market regulation

JEL Classification: J61, L50, J3

Suggested Citation

Prantl, Susanne and Spitz-Oener, Alexandra, Interacting Product and Labor Market Regulation and the Impact of Immigration on Native Wages. IZA Discussion Paper No. 7882, Available at SSRN: https://ssrn.com/abstract=2381134

Susanne Prantl (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Alexandra Spitz-Oener

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Germany

IZA Institute of Labor Economics

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
9
Abstract Views
217
PlumX Metrics