Wage and Employment Effects of Immigration to Germany: Evidence from a Skill Group Approach

33 Pages Posted: 14 Dec 2005

See all articles by Holger Bonin

Holger Bonin

IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research

Date Written: December 2005

Abstract

The paper analyzes the labor market impact of migration by exploiting variation in the labor supply of foreigners across groups of workers with the same level of education but different work experience. Estimates on the basis of German register data for the period 1975-1997 do not confirm the hypothesis that penetration of migrants into skill cells has a significant negative effect on the earnings and employment opportunities of native men. The results indicate that a 10 percent rise of the share of immigrants in the workforce would in general reduce wages by less than one percent and not increase unemployment. Though the adverse effects appear stronger for less-qualified and older workers, the evidence altogether sharply contrasts that from a parallel study for the United States indicating a consistent and substantial negative impact of an immigrant labor supply shock on native competitors.

Keywords: labor market effects of immigration, skill groups, wage elasticity, Germany

JEL Classification: J15, J31, J42

Suggested Citation

Bonin, Holger, Wage and Employment Effects of Immigration to Germany: Evidence from a Skill Group Approach (December 2005). Institute for the Study of Labor Discussion Paper No. 1875. Available at SSRN: https://ssrn.com/abstract=870272

Holger Bonin (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 303 (Phone)
+49 228 3894 510 (Fax)

ZEW – Leibniz Centre for European Economic Research

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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