Lower the wages for immigrants

Migration and the labor market

Herbert Brücker

To person

Dr. rer. pole.; Professor of Economics at the University of Bamberg and Head of Research at the Institute for Employment Research (IAB), Weddingenstrasse 20 - 22, 90478 Nuremberg.
Email: [email protected]

The fear that wage competition from migrants will endanger the jobs of German workers is unfounded. In fact, German workers generally benefit from immigration.

introduction

"The state is obliged to protect its citizens, it is obliged to prevent family men and women from becoming unemployed because foreign workers are taking their jobs away from them at low wages."
Oskar Lafontaine, July 4, 2005 in Chemnitz






The quote from Oskar Lafontaine reflects fears that are widespread in the population but also shared by many economists. They are based on two hypotheses: first, that an expansion of the labor supply leads to falling wages, and second, that - if wages do not react flexibly - unemployment rises. In the literature on the effects of immigration on the labor market, however, these assumptions are controversial: Many studies find little or no effects of immigration on wages and unemployment risks of the local population. Against the background of more recent theoretical and empirical findings, the question of what this discrepancy between the fears and empirical findings can be traced back to should be investigated here.

It is undisputed in research that migration from a global perspective leads to a more productive use of the labor factor and thus to an increase in the global national product. Workers tend to migrate from countries with low wages and often high unemployment to countries with higher wages and low unemployment. The gross domestic product per capita in the countries of origin of the immigrants to Germany is around a third of the German level. [1] Given this gap, labor migration leads to a significant increase in global per capita income. Simulation models show that the potential income gains from an opening of the labor markets are much higher than from further liberalization of trade and capital movements. [2]

However, the benefits and costs of migration are not evenly distributed across the countries of immigration and emigration and the various groups of people. From a theoretical perspective, the effects depend on the assumptions made about the adjustment of the capital and goods markets. In the following, the various assumptions and their effects on the potential labor market effects of migration are discussed.