Pains and Gains Foregone: Restrictive Immigration Policy in Post-Enlargement Germany (original) (raw)

Abstract Many European,countries restrict immigration,from,new,EU member,countries. The rationale is to avoid adverse,wage,and employment,e¤ects. We quantify these e¤ects for Germany. Following Borjas (2003), we estimate a structural model of labor demand, based on elasticities of substitution between,workers with di¤erent experience levels and education. We allow for unemployment,which we model in a price-wage-setting framework. We simulate a counterfactual,scenario without,restrictions for migration,from new,EU members countries. We …nd moderate negative wage e¤ects, combined with increased unemployment,for some,types of workers. Uncoordinated,wage-setting aggravates wage cuts. 1,Introduction The treaties regulating the entry of 12 Central- and Eastern European countries (CEECs)