The Effect of Migration on Careers of Natives

The paper presented in this ZEW Research Seminar notes that across OECD countries, rapid population aging has sizable implications for the provision of long-term care. A popular strategy to address worker shortages in the care sector is to increase the inflow of working migrants. In this paper, the authors exploit a shift-share instrument, coupled with exogenous variation induced by a policy reform, to study the labor market effects of immigration into this sector in Germany. The analysis is based on administrative social security data, in which they observe the universe of migrant and native long-term care workers. They first show that additional ten foreign workers lead to the displacement of approximately four to five of their native counterparts, meaning that migration increases the overall staffing. They then go beyond the standard regional assessment of employment effects and investigate immigration-driven changes in native careers. The authors find that higher local migrant stocks induce natives to change jobs to occupations with lower physical and psychological strain, non-manual task content and higher wages. To check the plausibility of the instrument's exogeneity, they conduct a series of checks consistent with the recent literature on shift-share design.