published in: Scottish Journal of Political Economy, 2009, 56 (3), 332–352
The design of optimal immigration policy, particularly in the face of the spiralling demand for
highly skilled workers, such as IT workers and engineers, is a topical issue in the policy
debate as well as the economic literature. In this paper, we present empirical evidence from
firm level data collected in 2000 on the demand in Europe for highly skilled workers in
general and abroad and their determinants. Major findings are that the fraction of highly
skilled recruited from the international labour market is very small, and it seems that foreign
and domestic workers are very similar in terms of formal education, that is subject of
specialisation, and job characteristics. We suggest an efficiency wage model that can explain
why firms recruit foreign workers in small numbers and are willing to pay migrants the same
wage as local workers and at the same time are willing to pay for moving costs, for example,
that are specific to immigrating workers.
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