My dissertation examines selected topics in internal and external migration in Germany. The goal is to deliver a comprehensive analysis of migration patterns since the fall of the Berlin Wall and find potential answers to current challenges in the German labor market such as demographic aging and shortage of skilled labor supply in certain sectors. Immigration of skilled foreign workforce is widely regarded as one of the means to counter the shrinkage in the labor market. The contribution of immigrant workers to the economy hinges on their labor market integration. Integration of newcomers is then in itself an additional challenge faced by the state. On one hand, the bureaucracy can potentially slow down the process of integration. On the other hand, this process is defined by the skills, language knowledge, and cultural proximity of immigrants to Germany. The integration processes are being further shocked by the inflow of refugees resulting from the wars in the Near East and Ukraine. In these challenging times, the results of the included studies aim to deliver insights regarding changes in the skills selection of immigrants, labor market assimilation and cultural proximity to the receiving country, and lastly, the employment of female immigrant workers given their ever-increasing role in the German labor market. Chapter 1 frames the dissertation and highlights its contribution to the broad literature on the economics of migration. The main body of the dissertation consists of three empirical studies that should give new insights to policymakers for better positioning against the challenges posed by demographic changes and the integration of immigrant workers. Chapter 2 deals with changes in the immigrants’ skills selection in the German labor market due to the European visa liberalization policy. Chapter 3 studies the speed of labor market assimilation in West Germany and uses internal East-West migration to investigate the role of cultural similarity. Chapter 4 discusses again the role of cultural and gender norms’ similarity between sending and receiving countries and focuses on the labor market outcomes of immigrant mothers relative to their German peers. The case study in this chapter contributes to the discussion of whether an unconditional cash transfer affects the differences between population groups. Chapter 5 concludes the dissertation, stresses its contributions and limitations, and delivers proposals for further research. The findings can be highly relevant for policymakers. Chapter 2 shows that even policies that were originally non-labor market related can potentially affect the inflows and the selection of immigrants, and provide potential tools to design new policies for encouraging immigration. Chapters 3 and 4 may deliver answers to questions such as whether policymakers should aim at attracting more culturally close workers for the sake of quicker labor market assimilation. Lastly, even with a relatively high labor market attachment, do immigrants with larger cultural differences to Germany react differently to certain policies such as child-related benefits relative to natives? Do these differences translate into different labor market outcomes for immigrant mothers? The dissertation makes a number of important contributions to the literature on the economics of migration. First, it adds to the literature on the selection of immigrants and the reduction of migration costs by analyzing a visa liberalization policy (Chapter 2). Exploiting the external effects of this kind of policy on the labor market is novel to the related literature. The study delivers new potential instruments to be extracted and used to design labor-market-oriented policies. Second, the dissertation revisits German reunification and uses it to extract findings relevant to the process of immigrant assimilation and the cultural proximity of immigrant groups to the culture of the receiving country (Chapter 3). Third, it contributes to the motherhood penalty (MHP) literature (Chapter 4), which has before only limitedly dealt with immigrant mothers’ post-childbirth labor market trajectories. The findings constitute a first step into understanding the short and long-run heterogeneities in maternal behavior based on the cultural background after the birth of the first child given the rising relevancy of immigrant mothers in the labor market. Chapter 2 explores the effects of a visa liberalization policy on immigrant selection based on their education. The study’s most notable aspect is that visa liberalization policies are not primarily intended to draw workers to the European Union (EU); instead, they are aimed at promoting short-term visits for purposes such as tourism, business, and trade. Starting in 2009, Germany began implementing bilateral visa-free travel agreements with several Eastern European countries that are not EU members. This was part of an EU-wide visa liberalization initiative, which eliminated all visa procedures for entering the Schengen area and Norway, allowing stays of up to 90 days for non-work purposes. While there has been a significant increase in the number of arrivals to Germany following this reform, little is known about the indirect effects of such policies on skill selection in the labor market. In our empirical analysis, we consider visa liberalization as a quasi-experiment, viewing the visa-free regime as a way to lower migration costs. Our study is among the first to exploit within-origin-country variation in migration costs. For our analysis, we utilize extensive data from the German Microcensus and the Integrated Employment Biographies (IEB). The results from our difference-in-differences (DiD) estimations indicate that the policy influences migrant selection positively based on education. However, the largest increase in entry wages is observed among immigrants without university degrees. Chapters 3 and 4 study the aftermath of migration. Chapter 3 deals with the post migration assimilation in the labor market. The study uses the case of East Germans who migrated to West Germany after the reunification (1990-1999) and discusses the role of cultural similarity for the speed of assimilation. The German East-to-West migrants are being regarded in literature simultaneously as international and internal migrants due to the historical nature of the German reunification with the German Democratic Republic (GDR) ceasing to exist. Being raised in separate countries, people from both German states still shared the same language, the same history, and parts of the education system. Thus, East-to-West migrants can be characterized by their high cultural similarity to West Germans. In this context, the study compares the wage assimilation of East Germans to that of ethnic German immigrants from Eastern Bloc countries and international immigrants to West Germany who arrived in the 1990s. The analysis utilizes data from the administrative Sample of Integrated Labour Market Biographies (SIAB) and survey data from the German Socio-Economic Panel (SOEP). The findings indicate that East Germans experienced significant initial earnings disadvantages in West Germany relative to West Germans, even after accounting for age and education. However, these disadvantages were smaller than those faced by international immigrants. Over time, the earnings gap relative to West German natives narrowed at the same rate (0.6% per year) for both East German and international immigrants. The positive assimilation was particularly driven by highly educated immigrants. Chapter 4 extends the discussion of the role of culture and gender norms in labor market participation. Here, I concentrate on the female population and examine the heterogeneities in the motherhood penalty (MHP) in Germany based on the mother’s cultural origin. I identify mothers in a custom sample from the IEB and track their labor market outcomes five years before and 10 years after the birth of a first child. Further, in a case study, I compare immigrant mothers’ labor market outcomes and reactions to a recent child allowance policy to those of native mothers. The event studies show that foreigners return on average later than the natives to the labor market. In the long run, natives have the smallest motherhood penalties both in employment and wages. This study reveals that mothers from predominantly Muslim countries that are in the lowest parts of wage distribution react negatively to child allowance policy in contrast to their native peers. Overall, this dissertation contributes to a better understanding of two stages of the migration process. The first stage regards the decision to migrate and the selection of migrants. The second stage regards the post-migration process of labor market assimilation in the destination country. Based on the results policy instruments can be designed to steer the immigration process given the normative goals of the government.
Irakli Sauer (Wed,) studied this question.