The Impact of Czech Commuters on the German Labour Market

Abstract

In the process of European integration, regions close to a border are especially affected by labour market liberalisation. Using data from the IAB employment subsample (IABS) and the employment register (BeH) for the period before and after the opening of the border (1980-2001) I shed light on the development of wages. Both German employees and Czech commuters in the western German borderland of Bavaria are compared to other domestic and foreign workers. At the beginning of the 1990s German legislation was relatively unrestrictive, so that it was quite easy for Czech workers to obtain a work permit beyond the border. Most of them had only low-skilled education. More than 5% of the eastern Bavarian male, low-skilled workforce was reported Czech in the early 1990s. Czech commuters were almost exclusively employed in five of the 27 Bavarian employment office districts overall, many of them in the building industry, the hotel and catering industry and the wholesale and retail industry. Surprisingly, precisely in this period German employees seem to have benefited from integration, but suffered in the years afterwards, when regulations on labour permits for commuters were far stricter.