Restrictive Immigration Policy in Germany: Pains and Gains Foregone?

68 Pages Posted: 8 Jun 2016

See all articles by Gabriel J. Felbermayr

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim

Wido Geis

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Wilhelm Kohler

University of Tuebingen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: 2008

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 (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, we find moderate negative wage effects, combined with increased unemployment for some types of workers. Wage-setting mitigates wage cuts.

Keywords: wages, migration

JEL Classification: J68, J61, J48

Suggested Citation

Felbermayr, Gabriel J. and Geis, Wido and Kohler, Wilhelm K., Restrictive Immigration Policy in Germany: Pains and Gains Foregone? (2008). Bundesbank Series 1 Discussion Paper No. 2008,18, Available at SSRN: https://ssrn.com/abstract=2785313 or http://dx.doi.org/10.2139/ssrn.2785313

Gabriel J. Felbermayr (Contact Author)

University of Stuttgart-Hohenheim ( email )

Keplerstra├če 17
D-70174 Stuttgart
Germany

Wido Geis

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschingerstr. 5
Munich
Germany

Wilhelm K. Kohler

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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