Labor Market Performance And Manufacturing Sector Contribution Of Immigrants In Germany

Immigration and refugee integration are some of the great global challenges of the present.Based on an OECD ranking,Germany is the second most popular migration destination after the US(OECD Migration Outlook,2018).In 2015,it adopted an open border policy and took in 890,000 refugees,where over 70,000 formally applied for political asylum.What started as a humanitarian act could result in an economic benefit for Germany:There is a growing demand for skilled workers on the one hand and Germany's ageing population as well as shrinking birth rates on the other.Once successfully integrated,immigrants could advert the predicted demographic development.In order to achieve that,the importance of developing a deep understanding of the labor and manufacturing sector performance of refugees and immigrants is a necessity.Therefore,the paper aims to investigate the nexus between an increase in the refugee flock,the labor market and manufacturing sector performance based on geographical regions within Germany.As such,the paper adopted both,time series and panel data using different econometric models in order to estimate the impact of immigrants and especially refugees.To avoid working with inconsistent and unreliable data,the paper ran different diagnostic tests,revealing that the variables and models are consistent.Differently,the regression estimates revealed that an increase in refugees is associated with a fall in both,the unemployment rate and the wage rate.Moreover,the adopted IV model showed that the impact is based on gender with males negatively contributing to the unemployment rate,and females positively contributing to the unemployment rate.Under the wage rate IV model,the estimates indicate that immigrants' origin significantly and differently affect the wage rate.Focusing on manufacturing performance:the paper concluded by stating that city immigrants contribute more to the return on equity of manufacturing companies than immigrants in municipal regions.The paper also revealed that the performance of the labor market significantly affects the manufacturing sector performance.In conclusion,the paper recommended that policy makers should introduce immigrants faster to the labor market by speeding up asylum procedures,put extra effort into integration of(female)refugees from the Middle East,and shorten the period from arrival upon the beginning of an employee-employer relationship.