Britta Rude (Leibniz Institute for Economic Research at the LMU Munich)

Technological Change and Immigration - A Race for Talent or of Displaced Workers

Co-author: Yvonne Giesing

Abstract

We study the effect of technological change on immigration flows as well as the labor market outcomes of migrants versus non-migrants. We look at two different automation technologies: Industrial robots and artificial intelligence. For this purpose, we take advantage of data provided by the Industrial Federation of Robotics as well as online job vacancy data. Our research focuses on Germany, a highly automated economy and the main migration receiving country among OECD countries. We find that automation technologies decrease the wage of the migrant population, while it increases it for natives. This holds for the low-, middle- and high-skilled and is indicative of migrants facing displacement effects, while natives might benefit from productivity and complementarity effects. Robotics does not impact overall immigration flows, but leads to a decrease in the migrant share in the manufacturing sector. AI has a positive effect on immigrant inflows. Policy makers should make sure that technological change does not exacerbate discriminatory structures and inequalities, that migrants have equal access to labor market institutions and relevant information related to technological change, and that companies can compete globally in the search for scarce talent.