Currently, around five million people receive long-term care insurance benefits in Germany. This number is projected to rise to seven million in the coming decades as the baby boomer generation ages. This surge poses a fundamental question: Who will provide the necessary care?
Traditionally, about 80% of care in Germany has been provided informally by family members, friends, and neighbors. However, due to an aging society and increasing employment rates among women, the pool of potential informal caregivers is shrinking. As informal care declines, the importance of formal care services—such as nursing homes and outpatient care—grows. Yet, the formal care industry already faces severe worker shortages. Nursing consistently ranks among industries with the greatest number of unfilled vacancies. With demand for care set to sharply increase, it is estimated that by the mid-2030s, Germany will need an additional half a million nursing staff.
A commonly proposed solution to address labor shortages is recruiting workers from abroad. Studies on the effects of foreign workers show mixed results. In some cases, immigrants substitute domestic employees, while others show that immigration boosts overall employment and helps native workers move into better jobs.
Our study explores the impact of foreign care workers in Germany using administrative data. We examine the effects of the 2011 reform, which allowed workers from the New Member States of the EU, such as Poland and Slovakia, to work in Germany freely. By comparing regions with high and low immigration, we assess the impact of these migrants on the employment and working careers of native caregivers.
Our findings show that foreign skilled workers increase overall employment in the long-term care sector. While some domestic caregivers leave the sector, the employment gains from foreign workers outweigh these losses. For every ten foreign skilled workers hired, about four domestic caregivers leave the sector.
To understand how domestic caretakers’ careers evolve in response to immigration, we distinguish between two groups of native workers: those who were employed as caretakers right before 2011 and those who were unemployed at that time. The first group experienced positive career changes, often transitioning to higher-wage and less physically demanding jobs. However, the second group faced challenges, as increased immigration lowered their chances of returning to nursing and increased the probability of overall unemployment.
Our study highlights the benefits of immigration for addressing Germany’s care crisis but also recognizes the need for better working conditions and job placement services to support native caregivers. Addressing these issues is crucial to resolving the growing care shortage.
This study is published as a working paper in the IZA Discussion Series:
Haan, P., & Wnuk, I. (2023). The Effect of Migration on Careers of Natives: Evidence from Long-Term Care (IZA Discussion Paper No. 16749). Institute of Labor Economics (IZA).
