Skip to main content
SpringerLink
Log in

Native wage impacts of foreign labor: a random effects panel analysis

  • Published:
Journal of Population Economics Aims and scope Submit manuscript

Abstract

Natives often fear labor market competition of foreigners, as they may induce declining wages and rising unemployment as in the case of natives and immigrants being substitutes. However, there is also the potential that they are complements, producing positive wage and employment effects. This issue is examined in a framework with two types of labor, such that low qualified native and immigrant workers (blue collar), although substitutes for one another, are potentially complements to high qualified native workers (white collar). This is thought to accurately reflect the past West German immigration experience. Examining the wage functions of white and blue collar natives in a random effects panel model using a vast sample of micro data, we actually find that foreigners negatively affect the wages of Germans on the whole. Relatively small gains are made by white collar employees with less than 20 years experience, but these are outweighed by the larger negative effects experienced by blue collar employees.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Altonji JG, Card D (1991) The effects of immigration on the labor market outcomes of less-skilled natives. In: Abowd JM, Freeman RB (eds) Immigration, trade, and the labor market. University of Chicago Press, Chicago, pp 201–234

    Google Scholar 

  • Borjas GJ (1990) Friends or strangers: the impact of immigration on the US economy. Basic Books, New York

    Google Scholar 

  • Breusch T, Pagan A (1980) The LM test and its application to model specification in econometrics. Rev Econ Stud 47:239–254

    Google Scholar 

  • German Statistical Office (Statistisches Bundesamt) German Statistical Yearbook 1985–1992

  • Greene W (1992) LIMDEP [6.01 User's Manual and Reference Guide. Econometric Software, Bellport, NY

    Google Scholar 

  • Grossmann JB (1982) The substitutability of natives and immigrants in production. Rev Econ Statist 64:596–603

    Google Scholar 

  • Godfrey LG (1988) Misspecification tests in econometrics.Cambridge University Press, Cambridge, pp 145–150

    Google Scholar 

  • Hamermesh DS (1993) Labor demand. Princeton University Press, Princeton, NJ

    Google Scholar 

  • Hicks JR (1970) Elasticity of substitution again: substitutes and complements. Oxford Econ Pap 22:289–296

    Google Scholar 

  • Mühleisen M, Zimmermann KIT (1993) A panel analysis of job changes and unemployment. Forthcoming: Eur Econ Rev

  • Rivera-Batiz FL, Sechzer SL (1991) Substitution and complementarity between immigrant and native labour in the United States. In: Rivera-Batiz FL, Sechzer SL, Gang IN (eds) US Immigration Policy Reform in the 1980's. Praeger, New York, pp. 89–116

    Google Scholar 

  • Rohwer G (1992a) A retrieval program for the SOEP. EMPAS-University of Bremen, mimeo

  • Rohwer G (1992b) RZoo: Efficient storage and retrieval of social science data. EUI Working Paper No. 92/19, Florence

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

    Google Scholar 

  • Schmidt CM, Zimmermann KF (1992) Migration pressure in Germany: past and future. In: Zimmermann KF (ed) Migration and economic development. Springer, New York, pp 201–230

    Google Scholar 

  • Staubhaar T, Zimmermann KF (1993) Towards a European migration policy. Popul Res Policy Rev 12:225–241

    Google Scholar 

  • Winkelmann R, Zimmermann KF (1993) Ageing, migration and labor mobility. In: Johnson D, Zimmermann KF (eds) Labour markets in an ageing Europe. Cambridge University Press, Cambridge, pp 255–283

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. SELAPO, Universität München, Ludwigstraße 28RG, D-80539, München, Germany

    John P. De New

  2. SELAPO, Universität München, Ludwigstraße 28RG, D-80539, München, Germany

    Klaus F. Zimmermann

  3. CEPR, London

    Klaus F. Zimmermann

Authors
  1. John P. De New
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Klaus F. Zimmermann
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

We wish to thank Don DeVoretz, Riccardo Faini, Andrea Ichino, and participants at the following 1993 conferences for their valuable comments where drafts of this paper were presented: “The Economics of International Migration: Econometric Evidence” at the University of Konstanz, “Internationale Migration und Arbeitsmarkt” der Schweizerischen Gesellschaft fur Statistik und Volkswirtschaftslehre at the University of St. Gallen, “Adjustment Policies in Previously Centrally Planned Economies: Which Lessons from Developing Countries Experiences“ at the University of Brescia, and “Congress of the European Society for Population Economics” in Budapest. Substantial revisions were made following the valuable suggestions of two anonymous referees and the special issue editor Wolfgang Franz, for which we are grateful.

Rights and permissions

Reprints and permissions

About this article

Cite this article

De New, J.P., Zimmermann, K.F. Native wage impacts of foreign labor: a random effects panel analysis. J Popul Econ 7, 177–192 (1994). https://doi.org/10.1007/BF00173618

Download citation

  • Received:

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF00173618

Keywords

Search

Navigation