The Impact of Immigration on Workers’ Protection
56 Pages Posted: 28 Feb 2022
Abstract
Even though the existing literature investigating the labor market impact of immigration assumes, implicitly or explicitly, that the law or labor market regulation is exogenous to immigration (in terms of both size and composition), this is not necessarily the case. To examine this link, we build a novel workers’ protection measure based on 36 labor law variables over a sample of 70 developed and developing countries from 1970 to 2010. Exploiting a dynamic panel setting using both internal and external instruments, we establish a new result: immigration impacts workers’ protection in the direction of the origin country workers’ protection (composition channel), while we find a small negative or null effect for the immigrant population (size channel). We find suggestive evidence on one mechanism: the law transfer effect materializes through immigrants’ distinctive unionization rate, which has an effect on unions’ bargaining power and parties’ political preference towards labor groups
Keywords: Migration, Labor Market Institutions, Labor Regulation, Legal Transplants, Law Transmission, Workers' Protection
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