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Immigrants or Jobs: Which Comes First to a Metro?

Jack Strauss

University of Denver - Reiman School of Finance; University of Denver

Hailong Qian

Saint Louis University - Department of Economics

January 23, 2014

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.

Number of Pages in PDF File: 23

Keywords: Immigration, Granger Causality, Employment

JEL Classification: J15, J61, R23, J1

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Date posted: October 12, 2013 ; Last revised: February 27, 2014

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

Contact Information

Jack Strauss (Contact Author)
University of Denver - Reiman School of Finance ( email )
2101 S. University Blvd
Denver, CO COLORADO 80126
United States
314 602 7265 (Phone)
University of Denver ( email )
2201 S. Gaylord St
Denver, CO 80208-2685
United States
Hailong Qian
Saint Louis University - Department of Economics ( email )
Lindell Boulevard
Saint Louis, MO 63108
United States
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References:  12