Migration and imperfect labor markets: theory and cross-country evidence from Denmark, Germany and the UK

Brücker, Herbert and Hauptmann, Andreas and Jahn, Elke J. and Upward, Richard (2013) Migration and imperfect labor markets: theory and cross-country evidence from Denmark, Germany and the UK. European Economic Review, 66 . pp. 205-225. ISSN 0014-2921

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Abstract

We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock. In Germany immigration involves only moderate wage, but large unemployment effects, since immigrants are concentrated in labor market segments with low wage flexibility. The reverse is true for the UK and Denmark.

Item Type: Article
Keywords: Immigration; Unemployment; Wages; Panel data; Comparative studies
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1016/j.euroecorev.2013.11.007
Depositing User: Kesaite, Viktorija
Date Deposited: 02 Sep 2015 13:19
Last Modified: 16 Sep 2016 23:36
URI: http://eprints.nottingham.ac.uk/id/eprint/29764

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