Abstract
The labor force of each industrial country is being shaped by three forces: ageing, education and migration. Drawing on a new database for the OECD countries and a standard analytical framework, this paper focuses on the relative and aggregate effects of these three forces on wages across different skill and age groups over 2000–2010. The variation in the age and educational structure of the labor force emerges as the dominant influence on wage changes. The impact is uniform and egalitarian: in almost all countries, the changes in the age and skill structure favor the low-skilled and hurt the highly skilled across age groups. Immigration plays a relatively minor role, except in a handful of open countries, like Australia and Canada, where it accentuates the wage-equalizing impact of ageing and education. Emigration is the only inegalitarian influence, especially in Ireland and a few Eastern European countries which have seen significant outflows of high-skilled labor to Western European Union countries.
Highlights
The labor force of each industrial country is being shaped by three forces: ageing, education and migration
Drawing on a new database for the OECD countries and a standard analytical framework, this paper focuses on the relative and aggregate effects of these three forces on wages across different skill and age groups over 2000 to 2010
The variation in the age and educational structure of the labor force emerges as the dominant influence on wage changes
Summary
As explained in Section ??, we use the DIOC database to characterize the socio-demographic changes that have taken place between the years 2000 and 2010. Highlight the wage effects that are due to the (net) variations in the stock of immigrants. These variations result from three forces: new migrant inflows, return migration, mortality. The DIOC database allows identifying the origin, education, and duration of stay of the population. We can identify the origin and education structures of immigrants who arrived between the years 2000 and 2010 and who were still living in the destination country in 2010. As duration of stay cannot be jointly identified by age group, we assume all recent immigrants are young (i.e. aged 25 to 44). Recent immigration makes the population younger, which increases the age premium and the competition among younger workers
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