Labor Market Effects Of Immigration Research Articles

Immigration and the Tower of Babel: Using language barriers to identify individual labor market effects of immigration

This paper introduces a novel approach to estimating immigration impacts on natives’ labor market outcomes. Differential language requirements across occupations serve as an arguably exogenous source of variation during the large and sudden immigration surge to Norway after the enlargements of the European labor market in 2004 and 2007. Migrant inflow into occupations is instrumented with occupations’ required level of (Norwegian) language skills. Administrative register data allow for a rich set of individual-level outcomes. Comparing workers in occupations with different language requirements, I find that a one percentage point increase in the share of Eastern European workers reduced native workers’ labor earnings by 0.75 percent. I further find adverse employment effects and evidence of skill-upgrading, but largely no other form of worker mobility among treated individuals. In particular, young woŕkers were hit in the wage dimension and old workers in the employment dimension. The results are highly robust.

Minimum wages and the labor market effects of immigration

This paper exploits the non-linearity in the level of minimum wages across U.S. States created by the coexistence of federal and state regulations to investigate the labor market effects of immigration. We find that the impact of immigration on the wages and employment of native workers within a given state-skill cell is more negative in States with low minimum wages and for workers with low education and experience. That is, the minimum wage tends to protect native workers from competition induced by low-skill immigration. The results are robust to instrumenting immigration and state effective minimum wages, and to implementing a difference-in-differences approach comparing States where effective minimum wages are fully determined by the federal minimum wage to States where this is never the case.

Minimum Wages and the Labor Market Effects of Immigration

Minimum Wages and the Labor Market Effects of Immigration

The labor market effects of immigration on natives: Evidence from Hong Kong

The local labor market in Hong Kong is characterized with two distinct features: the limited geographical mobility of native workers and their ethnic homogeneity to immigrants. Both of these features may exert a greater labor market pressure on native workers to immigrant inflows in Hong Kong compared to other local markets. Moreover, over the past three decades, new immigrants in Hong Kong are disproportionately less educated youths from Mainland China who are admitted through the one-way permit scheme for family reunion. In this paper, we introduce an immigrant exposure measure capturing the extent of exposure of natives in a given skill group to immigrants in terms of occupational competition, and identify the effects of immigration on natives' employment and earnings by relating the changes in natives' employment and earnings across skill groups to their changes in the immigrant exposure measure. To address the potentially endogenous responses of workers to occupational demand shocks, we further construct the projected immigrant exposure measure applying the lagged skill-group specific occupational employment structure to the contemporary skill distribution and employ it as a Bartik-style instrument. We find that competition from immigrants reduces the employment prospect of native females but not that of native males. However, for native males competition from immigrants yields significant adverse earnings effects, whereas for native females such earnings effects – though still negative – are smaller in magnitude and less often statistically significant.

Immigration and Voting for the Far Right

Does the presence of immigrants in one's neighborhood affect voting for far right-wing parties? We study the case of the Freedom Party of Austria (FPO) that, under the leadership of Jorg Haider, increased its vote share from less than 5% in the early 1980s to 27% by the end of the 1990s and continued to attract more than 20% of voters in the 2013 national election. We find that the inflow of immigrants into a community has a significant impact on the increase in the community's voting share for the FPO, explaining roughly a tenth of the regional variation in vote changes. Our results suggest that voters worry about adverse labor market effects of immigration, as well as about the quality of their neighborhood. In fact, we find evidence of a negative impact of immigration on “compositional amenities”. In communities with larger immigration influx, Austrian children commute longer distances to school, and fewer daycare resources are provided. We do not find evidence that Austrians move out of communities with increasing immigrant presence.

Minimum Wages and the Labor Market Effects of Immigration

We exploit the non-linearity in the level of minimum wages across US States created by the coexistence of federal and state regulations to investigate how minimum wages affect the labor market impact of immigration. We find that the effects of immigration on labor market outcomes of native workers within a given state-skill cell are more negative in U.S. States with low minimum wages (i.e., where the federal minimum wage is binding). The results are robust to instrumenting immigration as well as state minimum wages, and to implementing a difference-in-differences strategy comparing U.S. States where effective minimum wages are fully determined by federal standards over the whole period considered (2000-2013) to U.S. States where this is never the case. Our results therefore underline the important role played by minimum wages in mitigating any adverse labor market effects of immigration.

Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK

We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock. In Germany immigration involves only moderate wage, but large unemployment effects, since immigrants are concentrated in labor market segments with low wage flexibility. The reverse is true for the UK and Denmark.

Labor Market Effects of Immigration: Evidence from Neighborhood Data

AbstractThis paper combines individual‐level data from the German Socio‐Economic Panel (SOEP) with economic and demographic postcode‐level data from administrative records to analyze the effects of immigration on wages and unemployment probabilities of high‐ and low‐skilled natives. Employing an instrumental variable strategy and utilizing the variation in the population share of foreigners across regions and time, we find no support for the hypothesis of adverse labor market effects of immigration. Instead, we find a positive effect of immigration on the employment probabilities of high‐skilled natives.

The Labor Market Effects of Immigration and Emigration in OECD Countries

In this paper, we simulate the labor market effects of net immigration and emigration during the 1990's in all OECD countries. To accomplish this, we are the first to employ a comprehensive database of migrant stocks, grouped by education level and country of origin/destination, for the years 1990 and 2000. Due to the much higher international mobility of college graduates, relative to all other individuals, we find that net migration flows are college-intensive, relative to the population of non-migrants. Using the consensus aggregate model of labor demand and supply we simulate the long-run employment and wage effects of immigration and emigration. We use a range of parameter values spanning most of the estimates in the literature. In all cases we find that immigration had a positive effect on the wage of less educated natives. It also increased or left the average native wages unchanged and had a positive or no effect on native employment. To the contrary, emigration had a negative effect on the wage of less educated native workers and it contributed to increase within country inequality in all OECD countries. These results still hold true when we correct for the estimates of undocumented immigrants, for the skill-downgrading of immigrants, when we focus on immigration from non-OECD countries, and when we consider preliminary measures of more recent immigration flows for the period 2000-2007.

Migration and Imperfect Labor Markets: Theory and Cross-Country Evidence from Denmark, Germany and the UK

We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that wage flexibility is substantially higher in the UK compared to Germany and, in particular, Denmark. As a consequence, immigration has a much larger effect on the unemployment rate in Germany and Denmark, while the wage effects are larger in the UK. Moreover, the elasticity of substitution between natives and foreign workers is high in the UK and particularly low in Germany. Thus, the preexisting foreign labor force suffers more from further immigration in Germany than in the UK.

Does Immigration Into Their Neighborhoods Incline Voters Toward the Extreme Right? The Case of the Freedom Party of Austria

Does the presence of immigrants in one's neighbourhood affect voting for far right-wing parties? We study the case of the Freedom Party of Austria (FPO) which, under the leadership of Jorg Haider, increased its vote share from less than 5 percent in the early 1980s to 27 percent by the end of the 1990s and continued to attract more than 20 percent of voters in the 2013 national election. We find that the inflow of immigrants into a community has a significant impact on the increase in the community's voting share for the FPO, explaining roughly a tenth of the regional variation in vote changes. Our results suggest that voters worry about adverse labor market effects of immigration, as well as about the quality of their neighbourhood. In fact, we find evidence of a negative impact of immigration on compositional amenities. In communities with larger immigration influx, Austrian children commute longer distances to school, and fewer daycare resources are provided. We do not find evidence that Austrians move out of communities with increasing immigrant presence.

Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration*

AbstractIn this paper we employ a wage‐setting approach to analyze the labor market effects of immigration into Germany from 1980 to 2004. This enables us to consider labor market rigidities, which are prevalent in Europe. We find that the elasticity of the wage‐setting curve is particularly high for young workers. Moreover, natives and foreigners are imperfect substitutes. The wage and employment effects of immigration depend on the skill structure of the immigrant workforce. Because the foreign labor supply shift has mainly affected the high‐skilled labor market segment, the 4 percent increase of the workforce through immigration has not increased either aggregate or foreign unemployment.

Labor Market Effects of Immigration: Evidence from Neighborhood Data

This paper combines individual-level data from the German Socio-Economic Panel (SOEP) with economic and demographic postcode-level data from administrative records to analyze the effects of immigration on wages and unemployment probabilities of high- and low-skilled natives. Employing an instrumental variable strategy and utilizing the variation in the population share of foreigners across regions and time, we find no support for the hypothesis of adverse labor market effects of immigration.

Labor Market Effects of Immigration - Evidence from Neighborhood Data

This paper combines individual-level data from the German Socio-Economic Panel (SOEP) with economic and demographic postcode-level data from administrative records to analyze the effects of immigration on wages and unemployment probabilities of high- and low-skilled natives. Employing an instrumental variable strategy and utilizing the variation in the population share of foreigners across regions and time, we find no support for the hypothesis of adverse labor market effects of immigration.

Labor market effects of immigration in the United States and Europe: substitution vs. complementarity.

"This paper examines the impact of immigrants on the income of various groups of resident workers in the United States and Europe. Our approach features the use of a production technology incorporating education, experience, and unskilled labor as inputs.... We find that in both United States and European production, education, unskilled labor and experience are complementary inputs. Based on these results, simulations of the impact of immigration on residents are carried out. The absolute magnitude of these effects is found to be very small."

Efficiency wages versus insiders and outsiders

We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock. In Germany immigration involves only moderate wage, but large unemployment effects, since immigrants are concentrated in labor market segments with low wage flexibility. The reverse is true for the UK and Denmark.

The Labor Market Effects of Immigration

This paper is a theoretical examination of the probable effects on the U.S. labor market of a continued high rate of illegal immigration. The author constructs a model to estimate the impact each additional immigrant has on the employment of the domestic population, on GNP, and on the distribution of income. The model suggests that in non-recessionary periods the most important effect of a high rate of immigration is on the wage rates of low-skilled labor rather than on the employment of low-skilled native workers, but immigration also increases the earnings of high-skilled workers and the owners of capital. In the very long run, the author concludes, this redistribution of income will be offset to some extent by increases in the supplies of skilled labor and capital.

The Labor Market Effects of Immigration

The Labor Market Effects of Immigration