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Protective or Counter-Productive? European Labour Market Institutions and the Effect of Immigrants on EU Natives

Author

Listed:
  • Angrist, Josh
  • Kugler, Adriana D.
Abstract
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 labour 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.

Suggested Citation

  • Angrist, Josh & Kugler, Adriana D., 2002. "Protective or Counter-Productive? European Labour Market Institutions and the Effect of Immigrants on EU Natives," CEPR Discussion Papers 3196, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3196
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    Cited by:

    1. Peter Huber & Gabriele Tondl, 2012. "Migration and regional convergence in the European Union," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(4), pages 439-460, November.
    2. Schündeln, Matthias, 2007. "Are Immigrants More Mobile Than Natives? Evidence from Germany," IZA Discussion Papers 3226, Institute of Labor Economics (IZA).
    3. Baycan, T. & Nijkamp, P., 2011. "A socio-economic impact analysis of cultural diversity," Serie Research Memoranda 0012, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    4. Sascha O. Becker & Andrea Ichino & Giovanni Peri, 2004. "How Large Is the "Brain Drain" from Italy?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(1), pages 1-32, April.
    5. Alho, Kari E., 2002. "Labour Markets and Immigration Connected to Enlargement," Discussion Papers 791, The Research Institute of the Finnish Economy.
    6. Speciale, Biagio, 2012. "Does immigration affect public education expenditures? Quasi-experimental evidence," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 773-783.
    7. Anna Lialina, 2019. "Labor market security in the light of external labor migration: new theoretical findings," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(3), pages 1205-1225, March.
    8. Matthias Schündeln, 2014. "Are Immigrants More Mobile Than Natives? Evidence From Germany," Journal of Regional Science, Wiley Blackwell, vol. 54(1), pages 70-95, January.

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    More about this item

    Keywords

    Immigrant absorption; European unemployment; Labour market flexibility; Entry costs;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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