Do Foreigners Replace Native Immigrants? Evidence from a Panel Cointegration Analysis

32 Pages Posted: 15 Oct 2009

See all articles by Herbert Brücker

Herbert Brücker

German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Stefano Fachin

University of Rome I

Alessandra Venturini

University of Turin - Department of Economics; IZA Institute of Labor Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Abstract

This paper examines the impact of the immigration of foreigners on domestic labour mobility. Since David Card's seminal study on the regional labour market impact of the Mariel Boatlift it is controversial whether domestic labour mobility equilibrates economic conditions across cities and regions. However, there is little or no evidence that natives leave destinations where migrants tend to cluster. In this paper we reconcile the existing evidence by taking another route. We analyze whether the immigration of foreigners replaces domestic mobility from poor to rich regions. We focus on Italy, which is characterized by market differences in earnings between the North and the South. Based on a panel cointegration approach we exploit the variance of international and internal migration over time for identifying potential displacement effects. The main finding is that, conditional on unemployment and wage differentials, the share of foreign workers in the labour force of the destination regions discourages internal labour mobility significantly. As a consequence, spatial correlation studies which use the variance of the foreigner share across region for identifying the wage and employment effects of immigration, tend to understate the actual immigration impact.

Keywords: international migration, domestic migration, labour markets, panel cointegration, Italy

JEL Classification: F22

Suggested Citation

Brücker, Herbert and Fachin, Stefano and Venturini, Alessandra, Do Foreigners Replace Native Immigrants? Evidence from a Panel Cointegration Analysis. IZA Discussion Paper No. 4438, Available at SSRN: https://ssrn.com/abstract=1489261

Herbert Brücker (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

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Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Stefano Fachin

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Alessandra Venturini

University of Turin - Department of Economics ( email )

Via Po, 53
Torino, 10124
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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