Migration, Trade and Unemployment

Abstract

A source of anxiety of policy makers and the public in general is the detrimental impact of trade and immigration on unemployment. The transitory restrictions for worker migration after the EU enlargements of 2004 and 2007 exemplify the supposed negative effect of immigration on labor markets. This paper aims to identify the effects of immigration alongside trade on unemployment controlling for the high correlation between immigration and goods flows in order to prevent an omitted variable bias. The authors use data from 24 OECD countries over the period from 1997 to 2007 and employ instrumental variables fixed effects and dynamic panel estimators in order to account for unobserved heterogeneity as well as the potential endogeneity of migration flows and the high persistence of unemployment. We find no significant effect of immigration on unemployment on average. Special IssueResponding to the Labour Market Challenges of Globalisation JEL F22, F16, C23, C26, F15

Türkiye’de İşsizlik ve Kentleşmenin Göç Üzerindeki Etkisi: Harris-Todaro Modeli Açısından Bir Değerlendirme

“…As a result of the research, it was concluded that migration has no permanent effect on unemployment, even in the short term. Heid a& Larch (2012) analysed the relationship between migration and unemployment using dynamic panel data methods in their study between 1997-2007 for 24 OECD countries. As a result of the analysis, it was determined that migration negatively affected the average unemployment rate in the countries.…”

“…There are differences in the empirical studies that focus on migration and unemployment in terms of country/countries, period, and econometric method used. With this respect, some studies could not find the relationship between migration and unemployment (Jimenez, 2007;Chuikina & Fard, 2012;Fromentin, 2013;Altunc et al, 2017), that could find a negative relationship (Ceritoglu et al 2017;Esposito et al, 2019;Tripathi & Kaur, 2017;Köseoğlu & Artan, 2020), and that could obtain a positive relationship (Heid & Larch, 2012;Celik & Arslan, 2018;Aydın & Levent, 2021) between the variables. While studies reveal the positive relationship between migration and the unemployment rate within this scope, some studies claim a negative relationship.…”