Jan Rose Skaksen

Product Market Integration and Wages in Unionized Countries

This paper addresses the effects of product market integration on wages. We develop a two-country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages. Copyright 2002 by The editors of the Scandinavian Journal of Economics.

Do Immigrants Affect Firm-Specific Wages?

In this paper, we propose and test a novel effect of immigration on the wages of native workers. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, the use of immigrants may also affect wage formation at the most disaggregate level – the workplace. Using linked employeremployee data, we find that an increased use of workers from less developed countries has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and IV. Additional evidence suggests that this effect works at least partly through a general effect on the wage norm in the firm of hiring employees with poor outside options (the immigrants).

Immigrant Workers and Farm Performance: Evidence from Matched Employer-Employee Data

Many developed countries have recently experienced a significant inflow of immigrants in the agricultural sector. At the same time, the sector is still in a process of structural transformation resulting in fewer but bigger and presumably more efficient farms. In this paper, we exploit detailed matched employer-employee data for the entire population of Danish farms in the period 1980-2008 to analyze the micro-level relationship between these two developments. We find that farms that employ immigrants tend to be both larger and at least as productive as other farms. Furthermore, an increased use of immigrants is found to be associated with an improvement in farm performance as measured by job creation and revenue, and this seems at least in part to reflect a causal effect of the immigrants.

Does Coordination of Immigration Policies among Destination Countries Increase Immigration

We set up a theoretical model to analyze the implications of coordination of immigration policies among destination countries. The model contains two types of spillovers between destination countries: a terms-of-trade externality and a welfare-policy externality. We show that while coordination unambiguously increases welfare of the destination countries, the effects on the level of immigration and on the income distribution of natives are ambiguous. Thus, coordination among destination countries does not necessarily solve the global coordination problem of inoptimally low levels of migration.

Capital-Skill Complementarity and Rigid Relative Wages: Inference from the Business Cycle

The relative demand for skills has increased considerably in many OECD countries during recent decades. This development is potentially explained by capital-skill complementarity and high growth rates of capital equipment. When production functions are characterized by capital-skill complementarity, relative wages and employment of skilled labor are countercyclical because capital equipment is a quasi-fixed factor in the short run. The exact behavior of the two variables depends on relative wage flexibility. Relative wages are rigid in Denmark, implying that the employment share of skills should be countercyclical. The labor market is competitive in the United States and therefore relative wages of skilled labor are expected to be countercyclical. We find that the business cycle development of the two economies is consistent with capital-skill complementarity.

The welfare effects of business-cycle-induced immigration

Despite the fact that migration flows have always been closely related to business cycles, the effects of immigration are typically analysed in models without economic fluctuations. In this paper, we find that the welfare consequences of business-cycle-induced immigration are very different from the consequences of permanent immigration in a static economy. Specifically, the welfare effects depend crucially on (1) the return rate of immigrants in downturns and (2) the costs of recruiting immigrants. This has important consequences for the optimal design of temporary immigration programmes to deal with labour shortages.