Heterogeneous Effects of Immigration on the Career Development of Workers

• Applicant: Professor Dr. Sebastian Otten
• Subject Area: Statistics and Econometrics
• Term: from 2017 to 2019
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 349476157

The previous empirical literature on the consequences of immigration mainly concentrates on analyzing the short-term effects on natives' employment and wages. There is, however, no empirical evidence on workers' adjustment reactions and on the long-term effects of immigration on their career development. The aim of the proposed project is therefore to analyze workers' reactions to immigration in the medium and in the long run and to examine the consequences of immigration for their career development. In particular, it will be analyzed whether workers react to the increased competition due to immigration by (i) migrating to regions less affected by immigration, (ii) switching to higher skilled occupations ("occupational upgrading"), (iii) changing to firms that offer higher wages ("firm upgrading"), or (iv) acquiring additional human capital ("educational upgrading"). In doing so, it will further be investigated whether workers' adjustment reactions and the consequences for their career development vary for different age and education groups. To identify the causal effect of immigration, the so-called "Grenzgängerregelung" as of 1991, which allowed workers from the Czech Republic to work, but not to live, in Germany, will be used as a natural experiment. The empirical analysis is based on administrative longitudinal data that cover the employment histories of all individuals covered by the social security system in Germany. The main advantage of the data is that they allow to follow individuals over a long period of time and this way to observe and account for their adjustment processes to immigration. As these labor market adjustments can lead the short and long-term effects of immigration to differ substantially, analyzing the adjustment reactions of native workers as well as the consequences for their career development is crucial in assessing the true consequences of immigration for national labor markets.

• DFG Programme: Research Fellowships
• International Connection: United Kingdom
• Hosts: Professor Christian Dustmann, Ph.D.; Professorin Uta Schönberg, Ph.D.