Ms. Iftikhar, based on your model, you calculated that low-skilled workers are negatively
affected when large numbers of migrants enter the labor market. What are the details?
Zainab Iftikhar: In our analysis, we assume that migrants arriving in Germany have no
university entrance qualification, and are allowed to work immediately. Our analysis
suggests that a low-skilled immigration shock similar to that between 2012 until 2017 will
increase competition among low-skilled workers and push the wages of this group down by
1.2 percent. People in this group, with an average per worker gross wage of around 38400
Euros per year and 3200 Euros per month, are likely to face an annual wage decline of
about 461 Euros, according to our calculations. Our calculations are based on data for the
German Socio-Economic Panel (SOEP).
How about workers with a higher level of skills?
Zainab Iftikhar: Our analysis suggests that high-skilled workers could benefit from the
migration wave. On average, wages in this income group may rise by about 1.4 percent.
Based on an annual gross labor income of 55200 Euros, or 4600 Euros per month per
worker, the migration effect would translate to a rise of about 773 Euros per year.
What would be the effect on the income gap?
Zainab Iftikhar: The gains and losses may not seem significant at the individual level.
However, they may result in a larger income gap in society as a whole. With about 30
million low-skilled workers in Germany, the annual loss for this group amounts to 14 billion
Euros, while the annual gains of the high-skilled group (roughly 16 million) is 12 billion
Euros. We see that income is shifted from the lower to the higher income group. Such a
development could fuel anti-immigrant sentiment. If policymakers want to avoid this, they
should take efficient action to prevent the income gap from rising.
What can policymakers do to support the low-income group?
Zainab Iftikhar: Growing wage disparities can be tackled by government initiatives to train
low-skilled native workers. At the same time, immigrants should also take part in training
programs that cater to the German labor market demand. Of course, this requires language
training in the first place.
Furthermore, policymakers should help both immigrants and Germans, to become
self-employed or set up small businesses, for example, through low-interest loans. This will
improve job opportunities for low-income workers and help to increase their incomes. The
economy as a whole would benefit.