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

Brücker, Herbert; Hauptmann, Andreas; Jahn, Elke J.; Upward, Richard

Authors

Herbert Brücker Herbert.Bruecker@iab.de

Andreas Hauptmann andreas.hauptmann@iab.de

Elke J. Jahn elke.jahn@iab.de

Richard Upward richard.upward@nottingham.ac.uk



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.

Journal Article Type Article
Publication Date Nov 25, 2013
Journal European Economic Review
Print ISSN 0014-2921
Electronic ISSN 0014-2921
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 66
Institution Citation Brücker, H., Hauptmann, A., Jahn, E. J., & Upward, R. (2013). Migration and imperfect labor markets: theory and cross-country evidence from Denmark, Germany and the UK. European Economic Review, 66, doi:10.1016/j.euroecorev.2013.11.007
DOI https://doi.org/10.1016/j.euroecorev.2013.11.007
Keywords Immigration; Unemployment; Wages; Panel data; Comparative studies
Publisher URL http://www.sciencedirect.com/science/article/pii/S0014292113001438
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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