Browsing by Subject "Immigration"

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Endogenous technology, matching, and labor unions : does low-skilled immigration affect the technological alignment of the host country?
(2017) Cords, Dario
In recent years, Germany and other European countries face the strongest immigration flow in their history. Experts unanimously agree that one of the core factors of a successful social integration is the labor market participation of the new arrivals. This paper investigates the impact of low-skilled immigration on a unionized economy with labor market frictions. It especially examines how immigration affects the technology choice of firms and, thereby, the technological alignment of the host country. The labor market is characterized by heterogeneity on both sides of the market. Within this framework, it can be shown that low-skilled immigration encourages firms to invest more in a basic technology, which leads to a deterioration of the technology level in the whole economy. It can be further shown that policies, which improve the access of already existing low-skilled immigrants to the labor market counteract the effect that is triggered by an increase in low-skilled immigration.
Four essays on the impact of institutions, technological change, and globalization on labor market outcomes
(2019) Cords, Dario; Beißinger, Thomas
The thesis picks up some modern labor market phenomena and contributes to the literature by developing four theoretical models to analyze the effects on labor market outcomes. In particular, it 1) examines how the decision of labor unions to merge or to stay independent depends on the degree of product differentiation, 2) investigates the macroeconomic effects of the deregulation of temporary agency employment, 3) discusses if low-skilled workers will be substituted by automation, and 4) studies how the technological choice of firms in an economy changes due to low-skilled immigration. The first model focuses on the question of the optimal economic behavior of labor unions under multi-unionism. Developing a right-to-manage model, it analyzes how the decision of labor unions to merge or to stay independent depends on the degree of product differentiation. The model predicts that labor unions have strict incentives to merge if the products are substitutable in consumption, while they want to stay separated for complementary products. The second model studies the effects of the deregulation of temporary agency employment on labor market outcomes such as wages, unemployment, and the employment structure. It develops a search and matching model with large firms that produce differentiated goods using regularly employed workers that are organized in labor unions and, in addition, temporary agency workers that may search on-the-job for regular employment. The model shows that the legal deregulation of temporary agency employment increases overall employment and the rate of regular employment. The rate of regular employment increases, since labor unions reduce their wage claims in response to the deregulation of temporary agency employment. As the most surprising result, the model predicts a hump-shaped relationship between the degree of legal deregulation of temporary agency employment and its employment rate. This is explained by voluntary, non-institutional firm-level agreements that restrict the use of temporary agency employment in the production and get more important, the more deregulated temporary agency employment is. The third model incorporates automation in the search and matching framework to reveal if automation creates technological, skill-specific unemployment. The model assumes one-worker firms that operate in a low- or high-skill intensive intermediate sector and employ low- or high-skilled workers, respectively. The two intermediate goods, traditional capital and automation capital in form of industrial robots, 3D printer etc. are used for the production of a final good. Automation capital serves as a perfect substitute for low-skilled labor and an imperfect substitute for high-skilled labor. The model shows that the accumulation of automation capital leads to the creation of technological unemployment. While the unemployment rate of high-skilled workers decreases, low-skilled workers suffer and get replaced by automation capital. Further, the model predicts that wage inequality between high- and low-skilled workers rises as the wage rate of low-skilled workers declines, while the wage rate of high-skilled workers increases. The fourth model examines how the technological choice of firms in a host country change due to an exogenous inflow of low-skilled immigrants. It uses a search and matching model that considers two type of firms that either use a basic technology or a more advanced technology. Workers match with vacancies randomly and consist of three groups: low- and high-skilled natives and low-skilled immigrants. While the skill distribution of workers is exogenous, firms may endogenously adjust their skill requirements. Another feature of the model is that it captures educational mismatch of high-skilled natives. The model rather intuitively suggests that an increase in low-skilled immigration causes firms to change their behavior and to shift their production towards the basic technology. As a consequence, low-skilled natives benefit from the influx of low-skilled immigrants, while the wage rate of high-skilled natives decreases, whereas their employment rate goes up.
The local environment shapes refugee integration : evidence from post-war Germany
(2017) Braun, Sebastian Till; Dwenger, Nadja
This paper studies how the local environment in receiving counties affected the economic, social, and political integration of the eight million expellees who arrived in West Germany after World War II. We first document that integration outcomes differed dramatically across West German counties. We then show that more industrialized counties and counties with low expellee inflows were much more successful in integrating expellees than agrarian counties and counties with high in inflows. Religious differences between native West Germans and expellees had no effect on labor market outcomes, but reduced inter-marriage rates and increased the local support for anti-expellee parties.