We study the effects of immigration on wages using matched employer-employee data from Germany throughout the opening of the German labor market to Central and Eastern Europe in 2011. We show that migrants and native-born workers are highly segregated across firms, even within narrowly defined markets, and that migrants are over-represented at low wage firms. Motivated by these facts, we derive the effects of a migrant labor supply shock on wages in a model of worker sorting across heterogeneous firms. Segregation moderates wage effects by reducing competition, and workers exposed to competition respond by reallocating across firms. To test these predictions, we extend the Card (2001) ``ethnic enclave'' instrument to isolate firm-specific migrant labor supply shocks. Consistent with the model, we find that firms cut wages and shed German workers, but that workers move to higher wage firms with lower migrant shares. Our results suggest that inter-firm mobility is an important means by which the labor market adjusts to supply shocks, and can help explain the prevalence of null wage effects found in the literature.

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Abstract: We document two COVID-19–related risks, viral risk and employment risk, and their distributions across the Canadian population. The measurement of viral risk is based on the VSE COVID-19 Risk/Reward Assessment Tool, created to assist policy-makers in determining the impacts of pandemic-related economic shutdowns and re-openings. Women are more concentrated in high-viral-transmission-risk occupations, which is the source of their greater employment loss over the first part of the pandemic. They were also less likely to maintain contact with their former employers, reducing employment recovery rates. Low-educated workers face the same viral risk rates as high-educated workers but much higher employment losses. This is largely due to their lower likelihood of switching to working from home. For both women and the low-educated, existing inequities in their occupational distributions and living situations have resulted in them bearing  a disproportionate amount of the risk emerging from the pandemic. Assortative matching in couples has tended to exacerbate risk inequities.

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