How does immigration affect jobs and wages? In research with Sebastian Otten, Uta Schönberg and Jan Stuhler, we show that the answer depends on whether we look at regions or at individual workers (Dustmann et al, 2025).
Studying a policy that allowed Czech workers to commute to German border regions after the fall of the Berlin Wall, we find that immigration reduced employment at the regional level. But for workers already in jobs, the risk of job loss stayed low. This gap between ‘places’ and ‘people’ helps to explain why debates about immigration often talk past each other.
Czech workers in German border regions after the fall of the Berlin Wall
The effects of immigration are often measured by comparing labour market outcomes across regions. Areas with more immigration are compared with areas with less. But this approach blends together very different processes. It can show how employment or wages change in a place, but it cannot reveal what happens to the people who live and work there.
To separate these effects, we analyse a natural experiment from the early 1990s. After the fall of the Berlin Wall, Czech workers were allowed to work in German border districts without living there. This led to a sharp increase in labour supply in some regions but not others. Using administrative data that track individual workers over time, we compare regional outcomes with the experiences of the same workers before and after the shock.
The impact of immigration on native employment
A clear pattern emerges.
At the regional level, immigration appears to reduce native employment. A one-percentage-point increase in the immigrant employment share lowers native employment in affected regions by about 0.87% after three years.
But for workers who were already employed, the picture looks very different. Their probability of losing their job rises by only 0.14 percentage points – and the effect disappears after five years (see Figure 1).
Figure 1: The impact of immigration on native employment
Notes: The figure displays coefficient estimates of the immigration shock from year-specific regressions. The immigration shock is the inflow of Czech workers between 1990 and 1992 as a share of total employment in 1990. The vertical dashed line indicates the timing of the shock.
Source: Authors’ calculations based on Dustmann et al, 2025
This large gap is not due to widespread job losses among employed workers. Instead, it reflects changes in who enters the labour market. Immigration discourages some native jobseekers from taking jobs in affected regions. Young people may delay entry into work. Others may look for opportunities elsewhere.
In short, employment falls mainly because fewer people enter the labour market, not because those already working are pushed out.
The impact of immigration on native wages
Wages show a similar contrast. Regional average wages remain almost unchanged. But for native workers who stay employed, wages fall modestly. A one-percentage-point increase in the immigrant share reduces wages by about 0.19% after three years.
Again, the difference comes from changes in workforce composition. When fewer low-wage workers enter employment, the average wage of those who remain can stay flat – even though individuals experience wage declines. Regional averages therefore mask what happens to workers themselves (see Figure 2).
The effects are not evenly distributed. Older workers are more likely to be displaced than younger ones. People without a job when the immigration shock occurs struggle more to enter employment and experience larger wage losses. In contrast, employed workers are relatively protected: their job stability remains high and the wage declines are modest.
Figure 2: The impact of immigration on native wages
Source: Authors’ calculations based on Dustmann et al, 2025
Focusing on regional averages risks missing human consequences
Public debates often rely on regional statistics. But regional averages can be misleading.
A fall in regional employment may be interpreted as widespread job loss. Our research shows that this is often not the case. The main adjustment happens at the point of labour market entry, not through large-scale displacement of those already employed.
The same applies to wages. Stable regional averages do not mean that immigration has no effect. They can hide small but real wage declines among workers who remain employed.
This distinction matters for policy. Immigration does not affect everyone in the same way. Workers already in jobs appear relatively resilient to labour supply shocks. But people trying to enter the labour market – young people, jobseekers and those with weaker employment prospects – face greater challenges.
Understanding this difference can also help to explain why studies sometimes reach conflicting conclusions. Research based on regional data captures a mix of effects: displacement, changes in labour market entry and shifts in workforce composition. Studies that follow individuals tell a more precise story about who gains and who loses.
The broader lesson goes beyond immigration. Trade shocks, automation and technological change also reshape labour markets. Looking only at regional averages risks missing the human consequences of these changes. To understand how economies adjust, we need to track both places and people.
Policy responses to labour market shocks
Policy-makers should pay closer attention to how labour market shocks affect different groups.
Regional indicators remain useful. They show how local economies respond to change. But they should be complemented with evidence on individual workers. This helps to identify who bears the costs and where support is most needed.
Policies should focus in particular on people entering the labour market and those without stable employment. These groups are more vulnerable to shocks and may need targeted support. Training and education policies are especially important.
Our findings suggest that young people respond to immigration by investing more in skills – for example, by enrolling in apprenticeship programmes. Supporting these pathways can help workers to adapt and improve long-term outcomes.
For researchers, the next step is to apply this perspective more widely. Many economic shocks affect regions and workers differently. Distinguishing between these effects can clarify debates and improve policy design.
The central message is simple. Immigration affects places and people in different ways. Regional employment may fall while most workers keep their jobs. Average wages may stay flat while individuals experience modest declines. Adjustment costs often fall on those entering the labour market rather than those already employed.
Recognising this distinction helps to move the debate beyond averages and towards a clearer understanding of who is affected – and how.
