Labor Market Institutions and The Effect of Immigration on National Employment

Almosova, Anna (2013): Labor Market Institutions and The Effect of Immigration on National Employment.

Abstract

Integration processes in Europe resulted in intensification of migration flows. Immigrants account now for a large share of population in many European countries. A point of view that immigrants take jobs form natives is quite widespread. The European Monitoring Centre on Racism and Xenophobia published a special analysis of the attitudes towards minorities in EU countries Eurobarometer 2000. They found that one in two EU citizens worry about competing with immigrants for the same vacancies and afraid of losing their jobs because of presence of foreign workers. Different measures and institutions which protect native workers have nevertheless an ambiguous effect. On the one hand labor protective institutions such as minimal wage, replacement rate or firing restrictions will protect existing workers and reduce a firing rate. On the other hand, firms will take into consideration these additional costs of firing and will be less likely to employ new workers. At the same time, it is argued that immigrants are probably less likely to be covered by these institutions. These facts imply that protective institutions cover mostly natives and therefore make immigration labor force comparatively less costly. Labor market protection may therefore amplify a negative effect of immigrants on native employment if it exists.This paper attempts to evaluate the effect of immigration in flow on employment level of natives and reveal whether this effect changes in different institutional environments using EU-countries data. In addition to static specification it uses a dynamic specification to draw conclusions about long-term and short-term effects separately. The results show no long-run effect of immigration inflow. Short-term effect of is found to be positive. Protective labor market institutions fulfill their function of protecting existing workers.The results are also different for men and women.

• Item Type: MPRA Paper
• Language: English
• Keywords: Immigration, Labor Market Institutions, Displacement Effect
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J61 - Geographic Labor Mobility ; Immigrant Workers; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J65 - Unemployment Insurance ; Severance Pay ; Plant Closings

References

J. Altonji and D. Card. The eects of immigration on the labor market outcomes of less-skilled natives. Immigration, Trade, and the Labor Market, pages 201-234, 1991.

J.D. Angrist and A.D. Kugler. Protective or counter-productive? Labour market institutions and the effect of immigration on EU natives? Economic Journal, 113. 302-331, 2003.

M. Arellano and S. Bond. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58. 277-297, 1991.

O. Blanchard and J. Wolfers. The role of shocks and institutions in the rise of European unemployment: the aggregate evidence. The Economic Journal, 110.1-33, 2000.

G. Borjas. The economic analysis of immigration. in o. ashenfelter and d. card (eds). Handbook of Labor Economics, 3:1697-1760, 1999.

D. Card. Immigrant in flows, native outflows and the local labor market impacts of higher immigration. Journal of Labor Economics, 19(1):2264, 2001.

O.a Damette and Fromentin. The role of shocks and institutions in the rise of European unemployment: the aggregate evidence. The Economic Journal, 110:1-33, 2000.

Eurostat. Total population and resident population by group of citizenship, 2011.URL http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Total_population_and_resident_population_by_group_of_citizenship,_2011.png&limit=250

Eurostat. European union labour force survey, October 2012. URL http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_code=KS-SF-12-040.

I. Gang and F. Rivera-Batiz. Unemployment and attitudes towards foreigners in Germany. in g. Steinmann and r.e. Ulrich (eds). The Economic Consequences of Immigration to Germany, pages 121-154, 1994.

S. Jean and M. Jimnez. The unemployment impact of immigration in OECD countries. European Journal of Political Economy, 27:241-256, 2011.

T. Lippe L. Dijk. Comparative research on women's employment. Annual Review of Sociology, 28:211-241, 2002.

Nijkamp P. Poot J. Longhi, S. The impact of immigration on the employment of natives in regional labour markets: a meta-analysis. Working paper no. 2044. IZA, 2005.

H. Melkas and Anker R. Occupational segmentation by sex in Nordic Coutries: an impirical investugation. See Loutfi 2001, pages 189-213, 2001.

B. Morley. Causality between economic growth and immigration: An ARDL bounds testing approach. Economics Letters, 90(1):72-76, 2006.

R. Nickell, S. abd Layard and R. Jackman. Unemployment, macroeconomic performance and the labour market. Oxford University Press, 1991.

G. Nicoletti, S. Scarpetta, and O. Boylaud. Summary indicators of product market regulation with an extension to employment protection legislation. OECD economics department working paper no. 226. Paris: OECD, 2000.

OECD. Oecd employment outlook 2003, 2003. URL http://www.oecd-ilibrary.org/social-issues-migration-health/oecd-employment-outlook-2003_empl_outlook-2003-en.

OECD. Oecd employment outlook 2012, 2012. URL http://www.oecd-ilibrary.org/employment/oecd-employment-outlook_19991266;jsessionid=4babc670uf1m2.x-oecd-live-02.

L. Okkerse. How to measure labor market effect of immigration: a review. Journal of Economic Surveys, 22, No.1:1-30, 2008.

J. Pischke and J. Velling. Employment effects of immigration to Germany: an analysis based on local labor markets. Review of Economics and Statistics, 79:594-604, 1997.

D. Pope and G. Withers. Do migrants rob jobs? Lessons of Australian history, 18611991. Journal of Economic History, 53(4):719-742, 1993.

Filipa Sa. Does employment protection help immigrants? evidence from European labor markets. Labour Economics, 18:624-642, 2011.

R. Schoeni. The effects of immigration on the employment and wages of native workers: evidence from the 1970s and 1980s. RAND Research Paper, Martch, 1997.

E. Thalhammer, Zucha, Enzenhofer V., B. E., Salfinger, and G. Ogris. Attitudes towards minority groups in the European union. Vienna: European Monitoring Center on Racism and Xenophobia, 2001.

S. Weyerbrock. Can the European community absorb more immigrants? a general equilibrium analysis of the labor market and macroeconomic effects of eastwest migration in Europe. Journal of Policy Modeling, 17(2):85-120, 1995.

R. Winter-Ebmer and J. Zweimuller. Consequences of trade creation and increased immigration for the Austrian Labour market. in m. Landesmann and k. Pichelmann (eds). Unemployment in Europe, pages 250-267, 2000.

Hercowitz Z. and E. Yashiv. A macroeconomic experiment in mass immigration. Working paper no. 475. IZA, 2002.