TY  - RPRT
        AU  - Brücker, Herbert
AU  - Jahn, Elke J.
AU  - Upward, Richard
        TI  - Migration and Imperfect Labor Markets: Theory and Cross-Country Evidence from Denmark, Germany and the UK
        PY  - 2012/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 6713
        UR  - https://www.iza.org/publications/dp6713
        AB  - We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that wage flexibility is substantially higher in the UK compared to Germany and, in particular, Denmark. As a consequence, immigration has a much larger effect on the unemployment rate in Germany and Denmark, while the wage effects are larger in the UK. Moreover, the elasticity of substitution between natives and foreign workers is high in the UK and particularly low in Germany. Thus, the preexisting foreign labor force suffers more from further immigration in Germany than in the UK.
        KW  - panel data
KW  - labor markets
KW  - wages
KW  - unemployment
KW  - immigration
KW  - comparative studies
        ER  -