Do (Naturalized) Immigrants Affect the Income of Natives? Evidence from German Micro Census Data

Carsten Pohl, Institute for Employment Research (IAB)

Since the beginning of the 1990s Germany has experienced a rise in income inequality. During the same period of time a massive inflow of immigrants can be observed so that the question regarding the income effects of immigration arises. Previous empirical studies on the wage effect of immigration only consider individuals with a foreign citizenship as immigrants. Since the actual number of foreigners and individuals with a migration background differs significantly I explore whether the effect on native income is subject to the definition of an immigrant. Using data from the German micro census, I find that the magnitude but not the sign of the immigrant effect on native income changes with alternative immigrant definitions. The empirical analysis also shows that skilled immigration is positively associated with income increases of native employees in skilled jobs whereas the opposite effect is found for natives in occupations that only require little education.