How Immigration Grease Is Affected by Economic, Institutional, and Policy Contexts: Evidence from EU Labor Markets

Abstract

Theoretical arguments and previous country-level evidence indicate that immigrants are more fluid than natives in responding to changing labor shortages across countries, skill-groups or industries. The diversity across EU member states enables us to test this hypothesis across various institutional, economic and policy contexts. Drawing on the EU LFS and EU SILC datasets we study the relationship between residual wage premia as a measure of labor shortages in different skill-industry-country cells and the shares of migrants and natives working in these cells. We find that immigrants' responsiveness to labor market shortages exceeds that of natives in the EU15, in particular in member states with higher unemployment rates, higher levels of (recent) immigration, and more open immigration and integration policies; but also those with barriers to citizenship acquisition or family reunification. Whereas higher welfare expenditures seem to exert a lock-in effect, a comparison across different types of welfare states indicates that institutional complementarities neutralize that effect. JEL Classification:J15, J24, J61, J68

How immigrants helped EU labor markets to adjust during the Great Recession

“…The empirical strategy is adapted from Borjas (2001), Dustmann et al (2012), and Guzi et al (2014Guzi et al ( , 2015 …”

“…Guzi, Kahanec and Kurekova (2015) document this result for the In this paper we contribute to this literature by studying whether and how various immigrant groups in the EU-15 responded to asymmetric economic shocks across sectors, occupations and states before and during the Great Recession. Specifically, we measure the responsiveness to labor shortages of immigrants relative to natives building on the approach of Borjas (2001), Dustmann et al (2012) and Guzi et al (2014Guzi et al ( , 2015; and extend this framework to gauge the evolution of immigrants' relative responsiveness over the business cycle. We primarily use data from the EU Labor Force Survey (EU-LFS) and the EU Statistics on Income and Living Conditions (EU-SILC).…”

Behind Migrant and Non‐Migrant Worktime Inequality in Europe: Institutional and Cultural Factors Explaining Differences

“…While the share of foreign-born citizens living in the member states of the European Union has been increasing in the last decades, research consistently shows that migrants fare worse in the labour market than non-migrants. The reasons behind these inequalities have become a burgeoning area of inquiry for researchers, who typically focus on labour market outcomes such as employment status (Cangiano 2012;Dustmann and Frattini 2013;Fleischmann and Dronkers 2010;Guzi et al 2015;Kogan 2006;Pichler 2011;Reyneri and Fullin 2011), income (Adsera and Chiswick 2007), occupational attainment (Pichler 2011;Reyneri and Fullin 2011), and over-/underqualification (Landesmann et al 2015;Nieto et al 2015). In contrast, neglected topics in this research field are working times and the inequality between migrants and non-migrants in terms of weekly working hours.…”

“…These studies also suggest that a country's institutional context plays a role in working hour differences. However, though cross-country comparisons are the best way to examine the impact of institutions (Berg et al 2014;Guzi et al 2015;Reitz 2002), there is no cross-country comparative research on working hour differences between migrants and non-migrants to date.…”

The economic impact of east–west migration on the European Union

“…Regarding the effects of immigration on education, some previous studies suggest that the increase in the number of foreign students has a negative effect on the education of natives, while it increases the knowledge creation for universities (Hanson 2008;Kato and Sparber 2013). Using a panel of EU member states, industries and skill-groups, Guzi et al (2015), document that immigrants are more responsive to labor and skill shortages than natives, contributing to economic efficiency in the receiving countries. Kahanec and Zimmermann (2014), argue that immigration tends to reduce income inequality.…”