Do Immigrants Affect Firm-Specific Wages?

We propose and test a novel effect of immigration on wages. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, immigrants might also affect wage formation...

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Bibliographic Details
Published inThe Scandinavian journal of economics Vol. 114; no. 4; pp. 1267 - 1295
Main Authors Malchow-Møller, Nikolaj, Munch, Jakob R., Skaksen, Jan Rose
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.12.2012
Blackwell Publishing
Subjects
Economic impact
Economic rent
Economic theory
Employment
F22
Higher education
Hiring
Immigration
imperfect labour markets
J31
J61
Labor economics
Labor market
Labor markets
Labour market
Labour supply
Marginal costs
Monopsony
natives
Noncitizens
Skilled workers
Social conditions & trends
Standard error
Studies
Wage determination
wage formation
Wages
Wages & salaries
Work place
Workplaces
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Summary:We propose and test a novel effect of immigration on wages. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, immigrants might also affect wage formation at the most disaggregate level — the workplace. Using linked employer—employee data, we find that an increased use of low-skilled immigrant workers has a significantly negative effect on the wages of native workers at the workplace — also when controlling for potential endogeneity of the immigrant share using both fixed effects and instrumental variables.
Bibliography:ark:/67375/WNG-LQDP2LPH-T
ArticleID:SJOE1720
This paper is part of a joint project between the CEBR and the Rockwool Foundation Research Unit. We are grateful to the Rockwool Foundation for financial support. We thank George Borjas, Anna Piil Damm, Christian Dustmann, Bent Jensen, Peder Pedersen, Michael Svarer, Torben Tranæs, and two anonymous referees for comments, and we also thank Vibeke Borchsenius, Jonas Lønborg, and David Tønners for research assistance.
istex:C66521E6BF579EEBE3FFEAD97FCE058DF1553DA5
ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0347-0520
1467-9442
DOI:10.1111/j.1467-9442.2012.01720.x