Summary:
Based on a nonparametrically estimated model of labor market classifications, this paper makes suggestions for immigration policy using data from West Germany of the 1990s. It is demonstrated that nonparametric regression is feasible in higher dimensions with only a few thousand observations. In sum, labor markets are able to absorb immigrants are characterized by above average age and by professional occupations. On the other hand, labor markets for young workers in service occupations exhibit rising unemployment due to wage rigidities and are therefore not recommended for immigration. This raises a potential conflict between financing Germany’s ailing social security system and protecting decreasing or rigid labor markets by immigration control.
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*We are grateful to Daron Acemoglu, Joshua Angrist, Herbert S. Buscher, Lars P. Feld, Simon Gächter, Ira Gang, Mark Killingsworth, Gebhardt Kirchgässner, Roger Klein, John Landon-Lane, Michael Lechner, Stephen Machin, Ruth Miquel, Michael Piore, Winfried Pohlmeier, Hans-Joachim Voth, two anonymous referees and seminar participants at Rutgers University, MIT, University of Konstanz, and University of St. Gallen for helpful comments. Markus Frölich gratefully acknowledges financial support by the Swiss National Science Foundation (NSF 4043-058311). Patrick Puhani gratefully acknowledges financial support by the Volkswagen Foundation, Hannover. We thank the Center for European Economic Research (ZEW), Mannheim, for letting us work with the full sample of the German Socio-Economic Panel. All remaining errors are our own.
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Frölich, M., Puhani*, P.A. Developing an immigration policy for Germany on the basis of a nonparametric labor market classification. Allgemeines Statistisches Arch 88, 1– 22 (2004). https://doi.org/10.1007/s101820400156
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DOI: https://doi.org/10.1007/s101820400156