Protective or Counter-Productive? Labor Market Institutions and the Effect of Immigration on EU Natives

52 Pages Posted: 15 Feb 2002

See all articles by Joshua D. Angrist

Joshua D. Angrist

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Adriana D. Kugler

McCourt School of Public Policy ; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2002

Abstract

We estimate the effect of immigrant flows on native employment in Western Europe, and then ask whether the employment consequences of immigration vary with institutions that affect labor market flexibility. Reduced flexibility may protect natives from immigrant competition in the near term, but our theoretical framework suggests that reduced flexibility is likely to increase the negative impact of immigration on equilibrium employment. In models without interactions, OLS estimates for a panel of European countries in the 1980s and 1990s show small, mostly negative immigration effects. To reduce bias from the possible endogeneity of immigration flows, we use the fact that many immigrants arriving after 1991 were refugees from the Balkan wars. An IV strategy based on variation in the number of immigrants from former Yugoslavia generates larger though mostly insignificant negative estimates. We then estimate models allowing interactions between the employment response to immigration and institutional characteristics including business entry costs. These results, limited to the sample of native men, generally suggest that reduced flexibility increases the negative impact of immigration. Many of the estimated interaction terms are significant, and imply a significant negative effect on employment in countries with restrictive institutions. The relationship between alcohol consumption and labor market behavior for both males and females. The findings are robust to model specifications and various alcohol consumption measures.

Keywords: Immigrant Absorption, European Unemployment, Labor Market Flexibility, Entry Costs

JEL Classification: J23, J61, O52

Suggested Citation

Angrist, Joshua and Kugler, Adriana Debora, Protective or Counter-Productive? Labor Market Institutions and the Effect of Immigration on EU Natives (February 2002). IZA Discussion Paper No. 433. Available at SSRN: https://ssrn.com/abstract=300650

Joshua Angrist

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-353
Cambridge, MA 02142
United States
617-253-8909 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Adriana Debora Kugler (Contact Author)

McCourt School of Public Policy ( email )

3700 O ST NW
311 Old North
Washington, DC 20057
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics ( email )

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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
203
Abstract Views
1,667
rank
155,504
PlumX Metrics