Protective or Counter-Productive? Labor Market Institutions and the Effect of Immigration on EU Natives

By Joshua D. Angrist, Adriana D. Kugler. Social Science Research Network, 2003

492 citations recorded by the source corpus.

We estimate the effect of immigrant flows on native employment in Western Europe, and then ask whether the employment consequences of immigration vary with institutions that affect labor market flexibility. Reduced flexibility may protect natives from immigrant competition in the near term, but our theoretical framework suggests that reduced flexibility is likely to increase the negative impact of immigration on equilibrium employment. In models without interactions, OLS estimates for a panel of European countries in the 1980s and 1990s show small, mostly negative immigration effects. To reduce bias from the possible endogeneity of immigration flows, we use the fact that many immigrants arriving after 1991 were refugees from the Balkan wars. An IV strategy based on variation in the number of immigrants from former Yugoslavia generates larger though mostly insignificant negative estimates. We then estimate models allowing interactions between the employment response to immigration and institutional characteristics including business entry costs. These results, limited to the sample of native men, generally suggest that reduced flexibility increases the negative impact of immigration. Many of the estimated interaction terms are significant, and imply a significant negative effect on employment in countries with restrictive institutions.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/b0dad4d028976e9a9a62a9975497e121901b48e2

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Citations in the corpus

Immigration and the Economy of Cities and Regions (2014, background): “Other studies have examined the impact of the refugee flows from the breakup of Yugoslavia (Angrist and Kugler 2003), among other refugee flows (e.g., Foged and Peri 2013); and flows that are the result of natural disasters (Kugler and Yuskel 2008).”
The unemployment impact of immigration in OECD countries (2011, background): “However, these findings are consistent with previous results on the interaction with policies by Angrist and Kugler (2003), and on the dynamic employment impact of immigration by Hercowitz and Yashiv (2002).”
How Does Immigration Affect Native Internal Mobility? New Evidence from Italy (2010, unknown): “Angrist and Kugler (2003) and Ottaviano and Peri (2005 and 2006) use a similar approach.”
Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration* (2011, background): “…to the immigrant share and use the variance of the immigrant share across areas or industries for the identification of the employment impact (Angrist and Kugler, 2003; Borjas, Freemann, and Katz, 1997; Card, 2001; Dustmann, Fabbri, and Preston, 2005; Friedberg, 2001; Pischke and Velling,…”
Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare (2018, unknown): “Angrist and Kugler (2003) conclude that low labor market flexibility increases the negative effects of immigration in Europe.”
The Wage Impact of the Marielitos: A Reappraisal (2017, unknown): “…examine exogenous supply shocks and are clearly influenced by the Card framework; see Hunt (1992), Carrington and de Lima (1996), Friedberg (2001), Angrist and Kugler (2003), Saiz (2003), Borjas and Doran (2012), Glitz (2012), Pinotti, Gazzè, Fasani, and Tonello (2013), and Dustmann,…”
The Impact of the Recent Migration from Eastern Europe on the UK Economy (2007, unknown): “g) Europe Angrist and Kugler (2003) use the Balkan Wars as a Mariel-boatlift style immigration experiment to examine the impact of immigration in the European Economic Area for 1983-1999.”
Migration in an Enlarged EU: A Challenging Solution? (2009, background): “…population, low-skilled immigrants should be more prone to cluster in welfare-generous states and the effect of a change in the level of welfare benefits should have stronger effects on immigrant’s welfare participation, that is, the benefits elasticity of immigrants should be higher than that of…”
HOW TO MEASURE LABOUR MARKET EFFECTS OF IMMIGRATION: A REVIEW (2008, background): “Angrist and Kugler (2003) find larger effects for EU countries with a decrease of a maximum of 1.6 percentage points.”
Do Immigrants Cause Crime (2012, background): “Supply-push factors are all events in origin countries that increase the propensity of population to emigrate; examples include economic crises, political turmoil, wars and natural disasters (see, for instance, Card, 1990; Friedberg, 2001; Angrist and Kugler, 2003; Munshi, 2003; Saiz, 2007). Since t”