How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany

This paper provides a comprehensive analysis of the dynamic labor market effects one largest forced population movements in history, mass inflow eight million German expellees into West Germany after World War II. The expellee was distributed very asymmetrically across two regions. We develop equilibrium model that closely fits decades historical data on regional unemployment differential and migration rate. Both variables increase dramatically decline only gradually over next decade. long-lasting adjustment process implies losses lifetime income native workers are not covered by conventional steady state analyses. Regional serves as an important margin for to insure against local supply shocks.