Implications of the European Migrant Crisis: Immigrant Share in European Labor Markets

Abstract

Immigration does not have a constant effect on workers across different education backgrounds and years of work experience. Nor does immigration represent the sole explanatory variable in changes in the wage structure of a country’s labor market. This paper is focused on determining the extent in which immigrant share in a nation’s labor market impacts the wages of native workers across different levels of education and work experience. To achieve a more reliable indication of the impact of immigration, I have chosen six European countries: Germany, Spain, Italy, Greece, Ireland, and Luxembourg; each with intangible differences in their immigration policy, culture, history, and attractiveness to prospective migrants. Understanding the response to increased immigration share from each nation’s labor force and wage structure, with a 1% increase in immigration constituting a 2.179% decrease in the native German wage, a 1.738% increase in the native Spanish wage, a 0.116% decrease in the native Italian wage, a 1.063% increase in the native Greek wage, a 0.925% decrease in the native Irish wage, and a 0.083% decrease in the native Luxembourger wage, provides me with sufficient data to speculate on the implications of European migrant crisis that is occurring through Europe. As is, it appears that perhaps immigration is not the problem after all; rather, it is the declining native share in the labor force, a clear result of the epidemic of low birth rates and aging population in most European nations. Could the migrant crisis, therefore, prove to be a long-run benefit for these nations?