Immigration affects the wages of the host country in several ways. Abstracting from lower
participation rates, immigration increases the labor force of the receiving country. This growth in labor supply affects average wages in the economy if other factors of production like capital are fi
xed due to changes in relative scarcities. Even if other factors of production adjust, this labor growth directly affects the average wage due to simple composition effects if the distribution of educations and skills of immigrants differs from the native population. For most European economies, this composition effect has reduced the average wage as immigrants were of lower average skill than native workers.