This paper shows that wage inequality in West Germany has increased over the past three decades, contrary to common perceptions. During the 1980s, the increase was concentrated at the top of the distribution; in the 1990s, it occurred at the bottom end as well. Our findings are consistent with the view that both in Germany and the U.S., technological change is responsible for the widening of the wage distribution at the top. At the bottom of the wage distribution, the increase in inequality is better explained by episodic events, such as supply shocks and changes in labor market institutions. These events happened a decade later in Germany than in the U.S.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor markets, (2) internationalization of labor markets and European integration, (3) the welfare state and labor markets, (4) labor markets in transition, (5) the future of work, (6) project evaluation and (7) general labor economics. Terms of use: Documents in Language Proficiency and Labour Market Performance of Immigrants in the UK Christian Dustmann Francesca Fabbri D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. This paper uses two recent UK surveys to investigate labour market performance, the determinants of language proficiency, and the effect of language on earnings and employment probabilities of non-white immigrants. Our results show that language acquisition, employment probabilities, as well as earnings differ widely across non-white immigrants, according to their ethnic origin. Language has a strong and positive effects on employment probabilities. Furthermore, lack of English fluency leads to substantial earnings losses of immigrants. While earnings of white and ethnic minority natives develop in a similar manner, there is a large earnings gap between these two groups, and ethnic minority immigrants. English fluency contributes considerably to reducing these differences. Addressing the problems of measurement error and unobserved heterogeneity in language variables, our results indicate that measurement error in the language variable leads to underestimation of the importance of language for employment probabilities and earnings in straightforward regressions. In comparison with results found for other coun...

This paper analyses the effect immigration has on wages of native workers.Unlike most previous work, we estimate wage effects along the distribution of wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find that immigration depresses wages below the 20th percentile of the wage distribution, but leads to slight wage increases in the upper part of the wage distribution. The overall wage effect of immigration is slightly positive. The positive wage effects we find are, although modest, too large to be explained by an immigration surplus. We suggest alternative explanations, based on the idea that immigrants are paid less than the value of what they contribute to production, generating therefore a surplus, and we assess the magnitude of these effects. Abstract: This paper analyses the effect immigration has on wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find that immigration depresses wages below the 20 th percentile of the wage distribution, but leads to slight wage increases in the upper part of the wage distribution. The overall wage effect of immigration is slightly positive. The positive wage effects we find are, although modest, too large to be explained by an immigration surplus. We suggest alternative explanations, based on the idea that immigrants are paid less than the value of what they contribute to production, generating therefore a surplus, and we assess the magnitude of these effects. 1 We are grateful to the Low Pay Commission and the ESRC (grant RES-000-23-0332) for funding this research. We are also grateful to George Borjas, David Card, Andrew Chesher and Simon Lee for helpful comments and discussions.

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 United Kingdom 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 paper presents and discusses comparative evidence on the performance of first-and second-generation immigrants in these countries in terms of education, earnings, and employment.

If migrants return to their origin countries, two questions arise which are of immediate economic interest for both immigration and emigration country: what determines their optimal migration duration, and what are the activities migrants choose after a return. Little research has been devoted to these two issues. This paper utilises a unique survey data set which records activities of returned migrants. We first illustrate the activities of immigrants after returning. We show that more than half of the returning migrants are economically active after return, and most of them engage in entrepreneurial activities. We then develop a model where migrants decide simultaneously about the optimal migration duration, and their after-return activities. Guided by this model, we specify and estimate an empirical model, where the after-return activity, and the optimal migration duration are simultaneously chosen. D