The labor market impact of immigration in Western Germany in the 1990s

Abstract

In this article we measure the effects of recent immigration on the Western German labor market looking at both wage and employment effects. Refining administrative data for the period 1987-2001 to account for ethnic German immigrants and immigrants from Eastern Germany, we find that the substantial immigration of the 1990's had very little adverse effects on native wages and on their employment levels. Instead, it had a sizable adverse employment effect as well as a small adverse wage effect on previous waves of immigrants. These asymmetric results are partly driven by a higher degree of substitution between old and new immigrants in the labor market. In a simple calculation we show that the largest aggregate effect of new immigration on natives and old immigrants comes from the increased costs of unemployment benefits to old immigrants. Those costs could be eliminated in a world of wage flexibility and no unemployment insurance in which immigration would not have any negative employment effect but only moderate wage effects. Keywords:

The impact of immigration on the well-being of natives

“…In the analysis, we control for a series of confounding factors at both the individual and regional level. In particular, we find that controlling for local labour market conditions does not influence our findings, a result which can be seen as a corollary of recent evidence that immigration does not have a detrimental effect on the German labour market (D'Amuri et al, 2010). We also investigate the effect of sorting by natives and immigrants.…”

“…However, recent patterns of immigration have changed dramatically, especially after the fall of the Berlin wall (a relevant discussion about immigration in Germany is given in Pischke andVelling, 1997 andD'Amuri et al, 2010). As a consequence, the "immigration rate" observed in a given region is the likely outcome of many complex factors such as economic characteristics and the presence of ethnic networks in the region of destination.…”

Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare

“…4 Some recent papers have moved a step forward and applied the structural empirical framework of the cell-approach to a situation where wages are set non-competitively. For instance D'Amuri, Ottaviano and Peri (2010), Felbermayr et al (2010), Brücker, Jahn and Upward (2011 postulate, in reduced form, that wages are decreasing functions of unemployment rates. While these models do allow for unemployment, the labor market imperfections are not micro-founded and the role of labor market institutions is not explicitly modeled.…”

Financing public goods and attitudes toward immigration

“…Second, in our empirical exercise we would have to assume that parameters capturing individuals'attitudes toward policy issues do not vary between individuals who drop out from high school (the poor) and individuals who completed secondary education (the middle-class), even though they may have di¤erent interests. 13 In an extension of the model we study the problem of deciding on the skill composition of an immigration ‡ow. See Appendix 2.…”

“…In this paper, we abstract from high skilled immigration since we want to study to what extent the perceptions of these e¤ects drive natives'attitudes toward low-skilled immigrants. 13 We call I the number of immigrants that are allowed to enter the country, with I 2 [0; I]. Total population will be, therefore, P = N + I:…”