The Effect of Migration on Natives' Employment Outcomes : Evidence from the Fall of the Berlin Wall

I study the impact of internal migration in Germany after the fall of the Berlin Wall on wages and employment in western German local labor markets. I use a novel strategy to control for the endogeneity of migrants’ destination choice, instrumenting observed migration with characteristics of the source region. I find a positive, but short-lived, effect on employment but no significant wage effects. Surprisingly, workers in occupations producing locally consumed goods and services were, if anything, relatively harmed by migration. This is contrary to what one would expect if the positive aggregate employment effects were driven by migrants’ consumption demand