Skip to main content

Unskilled labor and wage determination: An empirical investigation for Germany

Abstract

This article contributes to the ongoing debate on native wage impacts of immigration. I propose a mobile-fixed factor distinction as a framework in which to think about the differential impact of immigration on various labor market groups. Skilled workers are treated as a fixed factor of production since the strong reliance on skill certification in Germany inhibits mobility and shelters from competition. Unskilled workers, in contrast, receive competitive wages. Using data from the German Socio-Economic Panel for 1984–1989 I estimate panel wage regressions for groups of workers separated by skill certification. I find that university graduates’ wages increase, and the wages of workers without postsecondary degree decrease, as the industry share of unskilled workers increases. The effect for apprentices is ambiguous.

This is a preview of subscription content, access via your institution.

References

  • Abraham KG, Houseman SN (1994) Earnings inequality in Germany. In: Freeman RB, Katz LF (eds) Differences and changes in wage structures. University of Chicago Press for NBER, Chicago

    Google Scholar 

  • Borjas GJ (1995) The economic benefits from immigration. J Econ Perspectives 9 (2):3–22

    Google Scholar 

  • DeNew JP, Zimmermann KF (1994a) Blue collar vulnerability: Wage impacts of immigration. In: Steinmann G, Ulrich RE (eds) The economic consequences of immigration to Germany, Physica, Heidelberg

    Google Scholar 

  • DeNew JP, Zimmermann KF (1994b) Native wage impacts of foreign labor: a random effects panel analysis. J Popul Econ 7:177–192

    Google Scholar 

  • Fuller WA (1987) Measurement error models. Wiley, New York

    Book  Google Scholar 

  • Gang IN, Rivera-Batiz FL (1994) Labor market effects of immigration in the United States and Europe. Substitution vs. complementarity. J Popul Econ 7:157–175

    Article  Google Scholar 

  • Greene W (1992) LIMDEP [6.0] User’s Manual and Reference Guide. Econometric Software, Bellport, NY

  • Hamilton SF, Hurrelmann K (1994) The school-to-career transition in Germany and the United States. Teachers College Record 96:329–344

    Google Scholar 

  • Pischke J-S, Veiling J (1994) Wage and employment effects of immigration to Germany: An analysis based on local labor markets. ZEW Discussion Paper No 94-03

  • Schmidt CM, Zimmermann KF (1991) Work characteristics, firm size and wages. Rev Econ Statistics 73:705–710

    Article  Google Scholar 

  • Soskice D (1994) Reconciling markets and institutions: The German Apprenticeship System. In: Lynch L (ed) Training and the private sector: International comparisons. University of Chicago Press for NBER, Chicago

    Google Scholar 

  • Steedman H (1993) The economics of youth training in Germany. Econ J 103:1279–1291

    Article  Google Scholar 

  • Winter-Ebmer R, Zweimüller J (1994a) Immigration and the earnings of young native workers. CEPR Discussion Paper No 936

  • Winter-Ebmer R, Zweimüller J (1994b) Do immigrants displace native workers? The Austrian experience. CEPR Discussion Paper No 991

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Winkelmann, R. Unskilled labor and wage determination: An empirical investigation for Germany. J Popul Econ 9, 159–171 (1996). https://doi.org/10.1007/PL00003832

Download citation

  • Received:

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/PL00003832

JEL classification

  • F22
  • J31

Key words

  • Immigration
  • specific factor model
  • rents