How Immigration Impacts Natives' Wages: Investigating Cross-Country Differences

• Applicant: Professor Gerald Willmann, Ph.D.
• Subject Area: Economic Policy, Applied Economics
• Term: from 2018 to 2022
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 389628219

France and Germany are two major countries of immigration in Europe. In 2010, foreign-born individuals represented 7.2% and 6.3% of their respective population (Brücker et al., 2013). Despite different economic situations with respect to inequality and unemployment, the recent increase in asylum demands and illegal immigration has raised a vivid debate on the strictness of immigration policies in both countries. The economic consequences of immigration, especially for native workers, are at the centre of this debate.In three scientific work-packages (WPs), this project will investigate the impact of immigrant workers on natives jobs and wages. We will go beyond the existing literature by investigating why the impact of immigrants varies across countries. We will devote particular attention to task allocation and production strategies (WP1) and to trade integration (WP2) to detect conditional labour market effects of immigration. We will also investigate the interplay between labour market effects and immigration policies (WP3).WP1 will focus on the demand side of the labour market. We will explore how immigration affects task allocation within and across firms. We will also investigate the link between foreign employment and firms production strategies (such as outsourcing). WP2 will investigate to what extent the impact of immigrants on natives wages is conditioned by trade integration and subsequent characteristics of an economy such as the level of granularity (i.e. the domination of large firms). WP3 will study, both theoretically and empirically, the political determinants of immigration policies across European countries toward different types of immigrants. It will also explore how the degree of substitution between natives and immigrants relates to the determination of immigration policies.WP4 will organise the research cooperation. The project includes researchers with strong complementarities which are required to achieve this project that emerges at the interface of migration economics, international trade and the political economy of immigration. While both teams will work on task allocation and production strategies (WP1), the French team will look at trade integration and aggregate issues (WP2) and the German team will focus on immigration policies (WP3). Research efforts are set to happen as joint papers. We also expect an exchange of good practices on the use of the French and German employer-employee data.We will actively communicate on our results. Final results will be published in top-field/top-20 journals and research-based policy recommendations will be communicated through policy papers. Overall, the project will feed the public debate by providing a better understanding of the economic consequences of immigration in Europe.

• DFG Programme: Research Grants
• International Connection: France, United Kingdom, USA
• Co-Investigators: Olivier Gordart, Ph.D.; Léa Marchal, Ph.D.; Professor Dr. Max Friedrich Steinhardt
• Cooperation Partners: Professor Giovanni Facchini, Ph.D.; Professor Jerome Hericourt, Ph.D.; Clement Nedoncelle, Ph.D.; Gianluca Orefice, Ph.D.; Professor Giovanni Peri, Ph.D.