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

Arbeitspapier

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 non-employment, suggesting that "outsiders" shield "insiders" from the increased competition.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 10114

Classification and Topics

• Classification: Wirtschaft ; Labor Force and Employment, Size, and Structure ; Time Allocation and Labor Supply ; Geographic Labor Mobility; Immigrant Workers ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
• Subject: immigration ; wage effects ; labor supply elasticity ; internal migration

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dustmann, Christian ; Schönberg, Uta ; Stuhler, Jan
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/145248
• Last update: 10.03.2025, 11:41 AM CET