Abstract: In this paper, we investigate the economic returns to industrial espionage by linking information from East Germany’s foreign intelligence service to sector-specific gaps in total factor productivity between West and East Germany. Based on a data set that comprises the entire flow of information provided by East German spies over the period 1969-1989, we document a significant narrowing of sectoral West-to-East TFP gaps as a result of East Germany’s industrial espionage. This central finding holds across a wide range of specifications and is robust to the inclusion of several alternative proxies for technology transfer. We further demonstrate that the economic returns to industrial espionage are particularly strong in sectors that are closer to the West German technology frontier and in which constraints to the import of goods and services are particularly pronounced. Finally, our findings suggest that over the time period considered, industrial espionage crowded out standard overt R&D in East Germany.
Abstract: In this paper, we study the development and underlying drivers of skill premiums in Germany between 1980 and 2008. We show that the significant increase in the medium to low skill wage premiums since the late 1980s was almost exclusively concentrated among the group of young workers aged 30 or below. Using a nested CES production function framework which allows for imperfect substitutability between young and old workers, we investigate whether changes in relative labor supplies could explain these patterns. Our model predicts the observed differential evolution of skill premiums very well, in particular that of medium skilled workers. The estimates imply an elasticity of substitution between young and old workers of about 8, between medium and low skill workers of 4 and between high skilled and medium/low skilled workers of 1.6. Using a cohort level analysis based on Mikrozensus data, we find that long-term demographic changes in the educational attainment of the native (West-)German population - in particular of the post baby boomer cohorts born after 1965 - are responsible for the surprising decline in the relative supply of medium skilled workers which caused wage inequality at the lower part of the distribution to increase in recent decades. We further show that the role of (low skilled) migration - contrary to common belief - is limited in explaining the changes in relative labor supplies.
Abstract: In this paper, we analyze how the formal recognition of immigrants' foreign occupational credentials affects their subsequent labor market outcomes. Our empirical analysis is based on a novel German data set that links respondents' survey information to their administrative records, allowing us to observe immigrants at monthly intervals before, during and after their application for occupational recognition. To address the inherent issue of self-selection into the application process, we focus on a sample of immigrants who eventually all receive full recognition, and exploit variation in the timing of the recognition process. As a robustness check, we further employ a pooled synthetic control group approach, matching workers who obtain full recognition to control groups of workers with similar pre-recognition labor market trajectories. Our empirical findings show substantial employment and wage gains from occupational recognition, both in the short and in the long run. After four years, immigrants who obtained full recognition are around 45 percentage points more likely to be employed and earn around 40 percent higher hourly wages than immigrants without recognition. We show that the increase in employment is driven almost exclusively by a higher propensity to work in regulated occupations. Relating our findings to the relative earnings position of immigrants in Germany, we finally show that occupational recognition leads to a substantially faster convergence of immigrants' earnings to those of their native counterparts.
Abstract: This paper studies the effect of coworker-based networks on individual labour market outcomes. I analyse how the provision of labour market relevant information by former coworkers affects the employment probabilities and, if hired, the wages of male workers who have previously become unemployed as the result of an establishment closure. To identify the causal effect of an individual worker's network on labour market outcomes, I exploit exogenous variation in the strength of these networks that is due to the occurrence of mass-layoffs in the establishments of former coworkers. The empirical analysis is based on administrative data that comprise the universe of workers employed in Germany between 1980 and 2001. The results suggest a strong positive effect of a higher employment rate in a worker's network of former coworkers on his re-employment probability after displacement: a 10 percentage point increase in the prevailing employment rate in the network increases the re-employment probability by 7.5 percentage points. In contrast, there is no evidence of a statistically significant effect on wages.
Abstract: This paper derives novel testable implications of referral-based job search networks in which employees provide employers with information about potential new hires that they otherwise would not have. Using comprehensive matched employer-employee data covering the entire workforce in one large metropolitan labor market combined with unique survey data linked to administrative records, we provide evidence that workers earn higher wages and are less inclined to leave their firms if they have obtained their job through a referral. These effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm, suggesting that firms and workers learn about workers' productivity over time. Overall, our findings imply that job search networks help to reduce informational deficiencies in the labor market and lead to productivity gains for workers and firms.
Abstract: This paper provides a comprehensive description of the nature and extent of ethnic segregation in Germany. Using matched employer-employee data for the universe of German workers over the period 1975 to 2008, I show that there is substantial ethnic segregation across both workplaces and residential locations and that the extent of segregation has been relatively stable over the last 30 years. Workplace segregation is particularly pronounced in agriculture and mining, construction, and the service sector, and among low-educated workers. Ethnic minority workers are segregated not only from native workers but also from workers of other ethnic groups, although less so if they share a common language. From a dynamic perspective, for given cohorts of workers, the results show a clear pattern of assimilation, reminiscent of typical wage assimilation profiles, with immigrants being increasingly less likely to work in segregated workplaces with time spent in the host country.
Abstract: This paper analyzes how changes in the skill mix of local labor supply are absorbed by the economy, distinguishing between three different adjustment mechanisms: wages, expansion in size of those production units using the more abundant skill group more intensively, and more intensive use of the more abundant skill group within production units. We contribute to the literature by analyzing these adjustments on the firm rather than industry level, using German administrative data. We show that most adjustments occur within firms through changes in relative factor intensities and that firms entering and exiting the market are an important additional absorption mechanism.
Abstract: This chapter summarizes the main trends, policies and empirical evidence regarding immigration in Europe. We start by providing descriptive evidence on long-term immigration trends and current characteristics of the immigrant populations in various important European destination countries and Europe as a whole. We then discuss key policy issues in the European context, focusing on access to citizenship, asylum seeking, border enforcement, amnesties and policies to attract talent. In the second part of the chapter, we provide a survey of the large and growing literature on the recent European immigration experience, focusing on two key questions: what has been the socio-economic performance of immigrants in their destination countries and how has immigration impacted these countries' economies and native populations. We find large and highly persistent gaps in the economic performance of immigrants relative to natives in most destination countries, with only few instances of encouraging progress. Overall, there is little evidence of a detrimental effect of immigration on the economies of the host countries, which appear to respond to immigrant inflows through mechanisms more complex than simple factor price adjustments.
Abstract: With the fall of the Berlin Wall, ethnic Germans living in eastern Europe and the former Soviet Union were given the opportunity to migrate to Germany. Within 15 years, 2.8 million individuals had done so. Upon arrival, these immigrants were exogenously allocated to different regions to ensure an even distribution across the country. Their inflow can therefore be seen as a quasi-experiment of immigration. I analyze the effect of these inflows on skill-specific employment rates and wages. The results indicate a displacement effect of 3.1 unemployed workers for every 10 immigrants that find a job, but no effect on relative wages.
Abstract: Sjaastad (1962) viewed migration in the same way as education: as an investment in the human agent. Migration and education are decisions that are indeed intertwined in many dimensions. Education and skill acquisition play an important role at many stages of an individual's migration. Differential returns to skills in origin- and destination country are a main driver of migration. The economic success of the immigrant in the destination country is to a large extent determined by her educational background, how transferable these skills are to the host country labour market, and how much she invests into further skills after arrival. The desire to acquire skills in the host country that have a high return in the country of origin may also be an important reason for a migration. From an intertemporal point of view, the possibility of a later migration may also affect educational decisions in the home country long before a migration is realised. In addition, the decisions of migrants regarding their own educational investment, and their expectations about future migration plans may also affect the educational attainment of their children. But migration and education are not only related for those who migrate or their descendants. Migrations of some individuals may have consequences for educational decisions of those who do not migrate, both in the home and in the host country. By easing credit constraints through remittances, migration of some may help others to go to school. By changing the skill base of the receiving country, migration may change incentives to invest in certain types of human capital. Migrants and their children may create externalities that influence educational outcomes of non-migrants in the destination country. This chapter will discuss some of the key areas that connect migration and education.
Abstract: A central concern about immigration is the integration into the labour market, not only of the first generation but also of subsequent generations. Little comparative work exists for Europe's largest economies. France, Germany and the UK have all become, perhaps unwittingly, countries with large immigrant populations albeit with very different ethnic compositions. Today, the descendants of these immigrants live and work in their parents' destination countries. This article presents and discusses comparative evidence on the performance of first and second-generation immigrants in these countries in terms of education, earnings and employment.
Abstract: In this paper, we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries, Germany and the UK. We show that, despite large differences in their immigrant populations, there are similar and significant differences in cyclical responses between immigrants and natives in both countries, even conditional on education, age, and location. We decompose changes in outcomes into a secular trend and a business cycle component. We find significantly larger unemployment responses to economic shocks for low-skilled workers relative to high-skilled workers and for immigrants relative to natives within the same skill group. There is little evidence for differential wage responses to economic shocks. We offer three explanations for these findings: an equilibrium search model, where immigrants experience higher job separation rates, a model of dual labour markets, and differences in the complementarity of immigrants and natives to capital.
Abstract: In the first part of this paper, we present a stylized model of the labour market impact of immigration. We then discuss mechanisms through which an economy can adjust to immigration: changes in factor prices, output mix, and production technology. In the second part, we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these.We then summarize some recent empirical studies for the UK and other countries. We conclude with an outlook on what we believe are important avenues for future research.
Abstract: This paper summarizes the recent economics literature on the immigration wave experienced by Spain over the last decade. We survey this growing literature and focus on two key questions: what has been the socio-economic performance of immigrants in Spain and how has immigration impacted the native population. On the former, we conclude that there is evidence of large and highly persistent gaps in the economic performance of immigrants relative to natives in Spain. On the latter, the studies surveyed reveal substantial adaptations in economic choices of Spanish natives in a number of dimensions, including the labor market, household production, schooling, and the housing market.
Department of Economics and Business
Labour Economics, Economics of Immigration, Applied Econometrics
Curriculum Vitae [ download pdf ]
Industrial Espionage and Productivity
with Erik Meyersson.
March 2016. [ abstract ]
Skill Premiums and the Supply of Young Workers in Germany
with Daniel Wissmann.
March 2016. [ abstract ]
Occupational Recognition and Immigrant Labor Market Outcomes
with Herbert Brücker, Adrian Lerche and Agnese Romiti.
October 2015. [ abstract ]
Coworker Networks in the Labour Market
Revise and resubmit at Labour Economics.
November 2013. [ abstract ] [ paper ]
Referral-based Job Search Networks
with Christian Dustmann, Uta Schönberg and Herbert Brücker.
Review of Economic Studies, Vol. 83 (2), pp. 514-546, 2016. [ abstract ] [ paper ]
How Do Industries and Firms Respond to Changes in Local Labor Supply?
with Christian Dustmann.
Journal of Labor Economics, Vol. 33 (3), pp. 711-750, 2015. [ abstract ] [ paper ]
Immigration in Europe: Trends, Policies and Empirical Evidence
with Sara de la Rica and Francesc Ortega.
In Handbook of the Economics of International Migration, Vol. 1B, Chapter 24, pp. 1303-1362, 2014. [ abstract ] [ paper ]
Barry R. Chiswick and Paul W. Miller (Eds.), North-Holland.
Ethnic Segregation in Germany
Labour Economics, Vol. 29, pp. 28-40, 2014. [ abstract ] [ paper ]
The Labor Market Impact of Immigration: A Quasi-Experiment Exploiting Immigrant Location Rules in Germany
Journal of Labor Economics, Vol. 30 (1), pp. 175-213, 2012. [ abstract ] [ paper ]
Migration and Education
with Christian Dustmann.
In Handbook of the Economics of Education , Vol. 4, Chapter 4, pp. 327-439, 2011. [ abstract ] [ paper ]
Eric A. Hanushek, Stephen Machin, and Ludger Woessmann (Eds.), North-Holland.
The Economic Situation of First- and Second-Generation Immigrants in France, Germany, and the UK
with Yann Algan, Christian Dustmann, and Alan Manning.
The Economic Journal, Vol. 120 (542), pp. F4-F30, 2010. [ abstract ] [ paper ]
Employment, Wages, and the Economic Cycle: Differences between Immigrants and Natives
with Christian Dustmann and Thorsten Vogel.
European Economic Review, Vol. 54 (1), pp. 1-17, 2010. [abstract ] [ paper ]
The Labour Market Impact of Immigration
with Christian Dustmann and Tommaso Frattini.
Oxford Review of Economic Policy, Vol. 24 (3), pp. 478-495, 2008. [ abstract ] [ paper ]
The Role of Coworker-based Networks in the Labour Market
CESifo DICE Report 1/2015. [ paper ]
Immigration in Spain: What Have We Learned from Recent Evidence?
with Sara de la Rica and Francesc Ortega.
Cuadernos Económicos de ICE, Vol. 87, pp. 9-28, 2014. [ abstract ] [ paper ]
The Labour Market Impact of Immigration
Opuscles del CREI, No. 36, 2014. [ paper ]