Template-Type: ReDIF-Paper 1.0
Title: Problem or Opportunity? Immigration, Job Search, Entrepreneurship and Labor Market Outcomes Of Natives in Germany
Author-Name: Zainab Iftikhar
Author-Email: iftikhar@uni-bonn.de
Author-Name: Anna Zaharieva
Author-Email: anna.zaharieva@uni-bielefeld.de

Classification-JEL: J23, J31, J61, J64, L26

Keywords: entrepreneurship, small business, self-employment, search frictions,
immigration

Abstract: This paper evaluates the effects of low-skill immigration on small businesses, wages, and employment in Germany. We develop a search and matching model
with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using data from the German SocioEconomic Panel (SOEP).
Quantitative analysis shows that low-skill immigration increases the welfare of high-skill workers. It also leads to the endogenous
expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. However, the gains are
outweighed by the losses in welfare of low-skill workers, and overall, there is a marginal loss of per-worker welfare to the economy. Policies restricting immigrant
entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups.


Note: 
Length: 57
Creation-Date: 2025-11
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp714
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_714