Immigrants or Jobs: Which Comes First to a Metro?

23 Pages Posted: 12 Oct 2013 Last revised: 27 Feb 2014

See all articles by Jack Strauss

Jack Strauss

University of Denver - Daniels College of Business

Hailong Qian

Saint Louis University - Department of Economics

Date Written: January 23, 2014

Abstract

Does immigration leads to more job creation in an MSA, or does employment opportunities entice immigrant inflows to an MSA? Is immigration responsible for higher unemployment in a metro, or does immigration cause increases in self-employment that lead to improvement in labor market conditions? The temporal causal relationship between immigrants, job growth and unemployment is a politically and economically salient subject, but has been statistically untested in the economic literature. Using annual data of 500 MSAs, we use panel Granger causality tests to assess the temporal ordering of immigration and labor market conditions in an MSA. Results demonstrate one-way Granger causality from immigration to rising job growth and lower unemployment. Causality tests further reveal that foreign-born inflows cause higher self-employment rates, which in turn contribute to job creation. Results reject the booming city hypothesis that immigration and labor market outcomes are spuriously correlated due to improving labor market conditions attracting immigration to an MSA.

Keywords: Immigration, Granger Causality, Employment

JEL Classification: J15, J61, R23, J1

Suggested Citation

Strauss, Jack and Qian, Hailong, Immigrants or Jobs: Which Comes First to a Metro? (January 23, 2014). Available at SSRN: https://ssrn.com/abstract=2339192 or http://dx.doi.org/10.2139/ssrn.2339192

Jack Strauss (Contact Author)

University of Denver - Daniels College of Business ( email )

2101 S. University Blvd.
Denver, CO 80208
United States

Hailong Qian

Saint Louis University - Department of Economics ( email )

Lindell Boulevard
Saint Louis, MO 63108
United States

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