Martin Friedrich (Institute for Employment Research)
Kalina Georgieva and Elke Jahn
We study how Germany's introduction of a national minimum wage in 2015 affected economic immigration. Exploiting regional variation in exposure to the reform and administrative social security records, we find a significant increase in the employment of workers from Eastern European Union (EU) countries in Germany. This is consistent with the reform substantially raising potential earnings for Eastern EU immigrants in the presence of free labor mobility within the EU. The increase in immigrant employment was not offset by a decrease in native employment. The new immigrants were low- to medium-skilled but worked exclusively in relatively low-complexity occupations, implying positive selection relative to the task requirements of low-wage jobs. Immigration responses were concentrated in regions exhibiting elevated employment concentration before the reform, supporting the idea that the minimum wage attracts immigrants to monopsonistic labor markets.