“People living in ethnic enclaves have significantly poorer chances after a job loss,” says author Hannah Illing of
the EPoS Economic Research Center. One reason for this could be lower incentives to invest in human capital
relevant to the German labor market, such as language skills. Another explanation is that ethnic enclaves offer
fewer job opportunities overall.
Against the backdrop of the shortage of skilled workers in Germany, the economist recommends that
policy-makers promote the mobility of immigrants who have already been employed in Germany: “This group
could benefit greatly if they moved to regions with better labor market conditions after losing their jobs.”
Different wage development after job loss
The difficulties of migrants in the labor market are also reflected in wage development: Within five years after
job loss, the wages of people living in ethnic enclaves are on average 10 per cent lower compared to German
colleagues. Migrants outside an ethnic enclave earn 3.1 per cent less in comparison.
Positive wage gap after five years
However, if people with a migration background find a follow-up job, their working life in Germany can develop
very positively, as the current study shows. Five years after a dismissal, wages improve on average even faster
than those of native colleagues. This development is apparently favored by the change of employer. “One
possible explanation is that the dismissal virtually forces migrants to look for new career opportunities and they
thus succeed more often in finding a better-paid job,” says Illing.
Skilled labor shortage in Germany
Currently, many jobs in Germany remain unfilled, for example in nursing, in teaching at schools or in the skilled
trades. According to the Institute for Employment Research, the number of vacancies reached a new all-time
high of 2 million at the end of 2022. With the new law on skilled labor immigration, foreign skilled workers
should therefore be able to come to Germany more easily in the future.
"To enable integration into the German labor market, policy-makers should provide targeted assistance.
This applies, for example, to the job search or a job-related move. This will benefit both sides," says Illing.
IAB data examined after mass layoffs
The economists compare the development of wages and employment among persons with and without
German nationality after mass layoffs between 2001 and 2011. For this purpose, they examined the social
security data of the IAB (Institute for Employment Research) of about 146,000 persons who had been in
employment for more than three years before their layoff in the period between 1997 and 2016. An area
counts as an "ethnic enclave" if persons of the respective group of origin are overrepresented compared to the
respective average area in Germany.