Unskilled labor and wage determination: An empirical investigation for Germany

This article contributes to the ongoing debate on native wage impacts of immigration. I propose a mobile-fixed factor distinction as a framework in which to think about the differential impact of immigration on various labor market groups. Skilled workers are treated as a fixed factor of production since the strong reliance on skill certification in Germany inhibits mobility and shelters from competition. Unskilled workers, in contrast, receive competitive wages. Using data from the German Socio-Economic Panel for 1984-1989 I estimate panel wage regressions for groups of workers separated by skill certification. I find that university graduates' wages increase, and the wages of workers without postsecondary degree decrease, as the industry share of unskilled workers increases. The effect for apprentices is ambiguous.