Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment

By Christian Dustmann, Uta Schönberg, Jan Stuhler. Social Science Research Network, 2017

299 citations recorded by the source corpus.

By exploiting a commuting policy that led to a sharp and unexpected inflow of Czech workers to areas along the German-Czech border, we examine the impact of an exogenous immigration-induced labor supply shock on local wages and employment of natives. On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment. These average effects mask considerable heterogeneity across groups: while younger natives experience larger wage effects, employment responses are particularly pronounced for older natives. This pattern is inconsistent with standard models of immigration but can be accounted for by a model that allows for a larger labor supply elasticity or a higher degree of wage rigidity for older than for young workers. We further show that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or nonemployment, suggesting that “outsiders” shield “insiders” from the increased competition.

Subfields: Economics and Econometrics, General Health Professions, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/a65d5b90183ff3a66c3ba081b61c2513f089472b

Citations in the corpus

• Gifts of the Immigrants, Woes of the Natives: Lessons from the Age of Mass Migration (2019, unknown): “Results presented in Tables 7 and 8 are in line with those from a number of recent studies documenting that the waves of refugees have increased support for right-wing, populist parties as well as political polarization in Europe (Dustmann et al., 2016; Halla et al., 2017). They are also consistent ”