A Macroeconomic Experiment in Mass Immigration
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER)
Tel Aviv University - Eitan Berglas School of Economics; CEP, LSE; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
IZA Discussion Paper No. 475
This paper studies the effects of mass immigration from the former USSR to Israel in the 1990s on the employment of the native-born. The exogeneity and the size of this inflow make it a "natural experiment" of macroeconomic proportions. An open-economy macroeconomic model is used to analyze this experience, focusing on the differential entry of immigrants into the labor and goods markets and the ensuing dynamic implications for labor demand. The reduced form of the model consisting of two equations for native employment and the relative price of domestic goods is estimated, finding negative effects of immigration on native employment a year after arrival. The delay in the effect is attributed to a positive impact of immigration on the excess demand for goods and, thus, on the demand for labor earlier on.
Number of Pages in PDF File: 29
Keywords: Immigration, Open Economy, Natives Employment
JEL Classification: E24, F16, J61working papers series
Date posted: May 19, 2002
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