The Integration of Migrants in the German Labor Market: Evidence Over 50 Years

Abstract

Germany has become the second-most important destination for migrants worldwide. Using all waves from the microcensus, we study their labor market integration over the last 50 years and highlight differences to the US case. Although the employment gaps between immigrant and native men decline after arrival, they remain large for most cohorts; the average gap after one decade is 10 pp. Conversely, income gaps tend to widen post-arrival. Compositional differences explain how those gaps vary across groups, and why they worsened over time; after accounting for composition, integration outcomes show no systematic trend. Still, economic conditions do matter, and employment collapsed in some cohorts after structural shocks hit the German labor market in the early 1990s. Lastly, we examine the integration of recent arrivals during the European refugee “crisis” and the Russo-Ukrainian war.