How Immigration Grease is Affected by Economic, Institutional and Policy Contexts: Evidence from EU Labor Markets
Pre-print, article published in Kyklos, Vol. 71, Issue 2, pp. 213-243, 2018
29 Pages Posted: 11 Jan 2017 Last revised: 20 May 2018
Date Written: October 24, 2017
Theoretical arguments and previous country-level evidence indicate that immigrants are more fluid than natives in responding to changing skill shortages across countries, occupation-groups or industries. The diversity across EU member states enables us to test this hypothesis across various institutional, economic and policy contexts. Drawing on the EU LFS and EU SILC datasets we study the relationship between residual wage premia as a measure of skill shortages in different occupation-industry-country cells and the shares of immigrants and natives working in these cells. We find that immigrants’ responsiveness to skill shortages exceeds that of natives in the EU15, in particular in member states with low GDP, higher levels of immigration from outside EU, and more open immigration and integration policies; but also those with barriers to citizenship acquisition or family reunification. Whereas higher welfare spending seems to exert a lock-in effect, a comparison across different types of welfare states indicates that institutional complementarities alleviate such effect.
Keywords: labor supply, skill matching, migration, skill shortage, welfare state, institutions, policy, integration.
JEL Classification: J15, J24, J61, J68
Suggested Citation: Suggested Citation