Immigration and Wage Dynamics in Germany

By Sabine Klinger, Anvar Musayev, Jean-Marc Natal, Enzo Weber

December 27, 2019

Preview Citation

Format: Chicago

Sabine Klinger, Anvar Musayev, Jean-Marc Natal, and Enzo Weber. Immigration and Wage Dynamics in Germany, (USA: International Monetary Fund, 2019) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

German wages have not increased very rapidly in the last decade despite strong employment growth and a 5 percentage point decline in the unemployment rate. Our analysis shows that a large part of the decline in unemployment was structural. Micro-founded Phillips curves fit the German data rather well and suggest that relatively low wage growth can be largely attributed to low inflation expectations and low productivity growth. There is no evidence – from either aggregate or micro-level administrative data – that large immigration flows since 2012 have had dampening effects on aggregate wage growth, as complementarity effects offset composition and competition effects.

Subject: Labor, Labor markets, Migration, Population and demographics, Unemployment, Unemployment rate, Wages

Keywords: Effect of immigration, Europe, Germany, Immigration, Inflation expectation, Labor market, Labor markets, Labor tightness, Micro-data, Migration, Panel regression, Phillips curve, Reservation wage, Unemployment, Unemployment rate, Wage development, Wage difference, Wage distribution, Wage growth, Wage inflation, Wage Phillips curve, Wages, WLS panel wage equation, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/301
Stock No:

WPIEA2019301
ISBN:

9781513521145
ISSN:

1018-5941

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