EU leaders are well aware of the relevance of migration in the European policy agenda. Thirty-two pages out of forty-eight of the Presidency Conclusions at the November 2004 European Council were devoted to migration policies. Economic theory suggests that there is a strong case for policy...

This paper employs a wage-setting approach to analyze the labor market effects of immigration into Germany. The wage-setting framework relies on the assumption that wages tend to decline with the unemployment rate, albeit imperfectly. This enables us to consider labor market rigidities, which...