Restrictive Immigration Policy in Germany: Pains and Gains Foregone?

Many European countries restrict immigration from new EU member countries. The rationale is to avoid adverse wage and employment effects. We quantify these effects for Germany. Following Borjas (2003), we estimate a structural model of labor demand, based on elasticities of substitution between workers with different experience levels and education. We allow for unemployment which we model in a price-wage-setting framework. Simulating a counterfactual scenario without restrictions for migration from new EU members countries, we find moderate negative wage effects, combined with increased unemployment for some types of workers. Wage-setting mitigates wage cuts.migration, labor

Qualification Structure, Over- and Underqualification of the Foreign Born in Austria and the EU

This project focuses on comparing the qualification structure of migrants residing in Austria as well as their over- and underqualification rates to other EU countries. The skill structure of foreign born residing in Austria has improved slightly in the last years. Austria is, however, characterised by a high share of medium skilled migrants and a low share of highly skilled migrants. In addition among the pool of migrants in the EU from a given country, Austria generally selects the less qualified. The location decisions of highly skilled migrants are mostly governed by income opportunities, labour market conditions, ethnic networks and a common official language. Over- and under-qualification rates among the foreign born in Austria largely accord with the European average, the largest part of the differences can be explained by differences in qualification and country structure between the foreign born in Austria and the EU. Native-foreign born differentials in employment rates are, however, significantly higher in Austria than in other EU countries.Migration, Migration Policy, Migrant Skill Structure, Integration

Essays on urban and spatial economics

This thesis is composed of four chapters. The first one investigates the impact of immigration on housing markets. The rest study the effects of transport policy on economic outcomes. Chapter 1 provides causal estimates of the effects of an increase of foreign-born population on house prices. I use data for the Spanish provinces between 2001 and 2010. In order to infer causality I construct an instrument based on past location patterns by immigrant nationality. I find positive effects of the increase in the share of foreign-born population on both rental and purchase prices. The estimated elasticities are 0.6% for rental prices and 2% for purchase prices. I also investigate the relationship between immigration and native location (native displacement) and I find that immigrants attract natives to the same regions they locate. When I re-estimate the effects using solely the variation on population growth which is due to exogenous location of foreign-born, I find that estimates are around 30-40% smaller than if we ignored the relationship between immigration and native location decisions. Chapters 2 to 4 investigate the effects of road improvements on aggregate and individual economic outcomes, using data for Great Britain during the period 1998-2008. Chapter 2 develops the methodology to estimate the economic impacts of transport improvements. We summarise the existing evidence and the theoretical channels through which transport policy can impact firm, worker and aggregate economic outcomes. To capture the effect of road improvements, we construct a measure of accessibility to employment through the road network. For this purpose, we collect novel data on 31 major road improvement projects and combine this information with the trunk road network in Great Britain in 2008. This information is used to calculate optimal travel times between locations at each point in time, which are used in the computation of the accessibility measures. The last two chapters discuss the empirical results, for ward and firm outcomes(chapter 3) and for individual labour market outcomes (chapter 4). I find positive effects of accessibility on ward employment and number of plants, a limited effect on plant employment and no effect on productivity. Accessibility from workplace has substantial impacts on individual wages and total hours worked, while accessibility from home only seems to have an effect on reducing the travel time to work

The Impact of Immigration: Why Do Studies Reach Such Different Results?

We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants. "Downgrading" occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin. We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.Jan Stuhler declares that he has received financial support by the Spanish Ministerio Economy Competitividad (Spain, MDM 2014-0431 and ECO2014-55858-P) and Comunidad de Madrid (MadEco-CM S2015/HUM-3444). Christian Dustmann declares that he has received financial support by the Norface Programme on Migration (funded by European national research councils) and the European Research Council, ERC Advanced grant DMEA

Essays on labour market flows, immigration and persistence of temporary jobs

In the last decades, the world economy experienced two striking transformations that shocked labour markets around the world, specially in developed economies. The first one is the boom in migration flows which caused an unprecedented increase in the labour force share of foreign-born workers in many countries. The second one is related to the emergence of the Great Recession in 2008, which had driven back the attention of macroeconomics to understand the impact of economic cycles in the evolution of unemployment and other macroeconomic aggregates. The rise in workers’ heterogeneity that resulted from the increase in immigration is, interestingly, proven to be essential to fully comprehend this impact. This dissertation aims to understand the heterogeneous impact of economic cycles on the labour market outcomes of different workers’ groups (natives/immigrants, private/public sector employees, temporary/permanent workers) and what are its implications on the overall impact of economic cycles on welfare and macroeconomic aggregates. In the first chapter, ‘Natives’ Responses to Immigration and the Cyclicality of Wages and Labour Market Flows: Immigrants versus Natives’, I document a number of facts regarding the immigration experience in Spain for the period between 1999 and 2015. Using Labour Force Survey microdata, I examine the cyclicality of job-finding and job-separation rates for immigrants and natives over the long Spanish economic expansion and the sharp contraction. During the expansion (until 2008) the job-finding rate was higher for immigrants than for natives, but both rates converged to a lower level after the Great Recession took place in 2008. I also find that the impact of the crisis on the job-separation rate was twice as high for immigrants than for natives. Using longitudinal social security data, I find that wage cyclicality is higher for immigrants than for natives: a one percentage point increase in the unemployment rate is associated with a 0.65% and 0.95% drop in real wages for natives and immigrants respectively. However, these differences only occur among low-tenure workers. Using the skill-cell approach, I study whether immigration is correlated with natives’ occupational upgrading or downgrading, regional mobility or changes in labour force participation. Immigration is positively correlated with natives’ occupational upgrading, while none of the other adjustment’s margins are significant. This study provides novel empirical evidence to enrich macroeconomic theories on the interaction of economic cycles and the impact of immigration. In the second chapter, ‘The Role of Immigration in a Deep Recession’, I study the impact of foreign-born workers on the labour market during a recession. This is relevant as many economies experienced large immigrant inflows before the Great Recession took place. To this end, I use a random search model of the labour market featuring vacancy persistence, endogenous return migration and wage rigidity. Consistent with the Spanish data, in the model some immigrants leave the country in the event of a recession, so they free up jobs for natives. Yet, since immigrants and natives differ in their match quality draws, immigrants also affect the firms’ job creation decision. While the return-migration channel is unambiguously positive for native workers, the calibration results for the Spanish economy suggest that the job-creation effect is negative. I find that immigrants smooth the recession and improve the welfare of natives. During the recession, the native unemployment rate would have been 2 percentage points higher in the absence of the pre-crisis immigration boom. Return-migration is the key channel since its short and long-run impact on natives’ unemployment rate is 10 and 2 times as large as the sum of the impact of the other channels. In the third chapter, ‘Lifetime Job Instability over the Life-Cycle’, co-authored with Rub´en Veiga-Duarte, we quantify the incidence of temporary jobs for workers late in their labour market career (at mid-career, defined as 30-35 years old). For that, we use Spanish administrative data from the “Continuous Sample of Working Histories”, which allows us to track workers’ entire labour marker history. We find that around 15 percent of workers spend more than 50 percent of their mid-career active time in temporary jobs. We also find a high degree of persistence in the time spent as temporary; workers spending most of their young-age (20-30 years old) employed in temporary jobs experience higher job-separation rates and find fewer permanent jobs later in their careers. Spending most of the young-time in temporary jobs is also associated with lower wages (around 10%) in permanent jobs, even at age 40. We then compare workers’ labour market performance at young-age conditional on their time spent as temporary or permanent at mid-career. We find that both groups start their careers with similar job-finding and job-separation rates in permanent jobs, but differences increase as they age. Finally, while mid-career temporary workers have lower wages in permanent jobs than mid-career permanent workers right from the beginning of their career, this gap remains roughly constant over time. This empirical evidence will be used to develop a theory that could help us to disentangle the underlying mechanisms that explain the observed persistence in temporary employment. In the forth chapter, ‘Labour market flows: Accounting for the public sector ’, coauthored with Idriss Fontaine, Pedro Gomes and Diego Vila-Martin, for the period between 2003 and 2018, we document a number of facts about worker gross flows in France, the United Kingdom, Spain and the United States, focussing on the role of the public sector. Using the French, Spanish and UK Labour Force Survey and the US Current Population Survey data, we examine the size and cyclicality of the flows and transition probabilities between private and public employment, unemployment and inactivity. We examine the stocks and flows by gender, age and education. We decompose contributions of private and public job-finding and job-separation rates to fluctuations in the unemployment rate. Public-sector employment contributes 20 percent to fluctuations in the unemployment rate in the UK, 15 percent in France and 10 percent in Spain and the US. Private-sector workers would forgo 0.5 to 2.9 percent of their wage to have the same job security as public-sector workers.Programa de Doctorado en Economía por la Universidad Carlos III de MadridPresidente: Marcel Jansen; Secretario:Andrés Etchebehere; Vocal: José Vicente Rodríguez Mor

Empirical Essays on the Economic Analysis of Social Connections

Social connections represent an important determinant of economic agents’ behaviour. The three chapters of this thesis empirically analyse the effect of different types of networks on several economic outcomes. The first chapter analyses the role played by co-worker networks on immigrants’ employment outcomes. It investigates how immigrants’ job search outcomes are affected by the labour market outcomes of co-workers from the same country of origin. Using matched employer-employee micro data from Italy and an instrumental variables approach, I show that an increase in the employment prospects of socially connected workers improves immigrants’ job search outcomes. The paper also sheds light on the different mechanisms generating the social effect and it highlights the role of migrant networks in explaining immigrant segregation. Chapter 2 employs a unique dataset on articles, authors and editors of the top four economics journals over the period 2000-2006 to investigate the role of social ties in the publication process. Connections between editors and authors are identified based on their academic histories. Regression results show that the existence of a social tie with an editor positively affects publication outcomes of connected scholars. The analysis of citations shows that connected articles receive on average a higher number of citations than non-connected ones. The final chapter focuses on the impact of female managers on female workers’ employment outcomes. Exploiting changes in the share of female managers induced by firms’ takeovers, I find no statistically significant effect of an increase in the presence of female managers on employment outcomes of female workers. However there is an interesting negative effect on wage inequality within the acquiring firm, which may matter for both equity and efficiency reasons.Support from the Fondazione Rodolfo DeBenedetti and the Royal Economic Society is very gratefully acknowledged

Essays on Labor Mobility

This dissertation investigates the determinants and consequences of labor mobility across geographic areas and firms. It is motivated 1) by the singular potential for such mobility to increase welfare; 2) by troubling macroeconomic declines in labor mobility and business dynamism in the U.S.; and 3) by recent literature that allows us to better-understand how differences across firms mediate labor market outcomes. Its first chapter argues that firm entry and exit play critical roles in determining how immigrant workers are absorbed into and affect local economies. It first documents a positive relationship between immigrant workers and business presence, with inflows driving small-to-medium sized firm creation and reducing exit by older, large firms. It finds that these responses play a dominant role in immigrant worker absorption, accounting for more than two-thirds of immigrant-induced job creation. Using observed proxies for productivity, it then uncovers a critical heterogeneity: while firms are less likely to exit on average, low-productivity firms are more likely to shut down in response to immigrant inflows. The resultant increases in creative destruction are driven by immigrant workers, as opposed to immigrant consumer demand. Placed in the context of a theoretical framework that accounts for firm heterogeneity, these results imply that firm entry and exit drive local production responses to immigration, leading to substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand. The second chapter is co-authored with Dhiren Patki. Using linked employer-employee administrative data from Germany, we find that cohorts entering the labor market during a recession experience a 4.9 percent reduction in wages cumulated over the first decade of labor market experience. While 40 percent of the wage loss is due to reductions in employer-specific pay, we use a revealed preference-based algorithm to show that fully three-fourths of the losses in employer-specific pay are compensated for by non-pay amenities. The higher non-pay amenities that we associate with recessionary labor market entrants are consistent with the view that employers that hire during business cycle downturns exhibit less cyclically sensitive labor demand and provide greater long-term job security. Our findings show that the welfare cost of labor market entry during recessions can be less severe than pecuniary estimates would imply. The final chapter is co-authored with Dean Yang. It studies the interplay between negative shocks in origin countries and migrant networks in destination countries. Specifically, we examine the impact of hurricanes on a quarter-century of international migration to the United States and find that hurricanes increase migration to the U.S., with the effect dominated by working-aged individuals and magnitude increasing in the size of prior migrant stocks. We provide new insights into how networks facilitate legal, permanent U.S. immigration in response to origin country shocks, a matter of growing importance as climate change increases natural disaster impacts.PHDPublic Policy & EconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/163109/1/paragma_1.pd

The Fallacy of Crowding-Out: A Note on “Native Internal Migration and the Labor Market Impact of Immigration”

In “Native Internal Migration and the Labor Market Impact of Immigration,” George Borjas (2006) identifies a strong negative correlation between immigration and native-born employment in the US using local area data. This relationship is particularly strong at the metropolitan area level, weaker but still significant at the state level, and weakest at the Census region level. In this note, we show that Borjas’s negative correlation arises due to the construction of the dependent and explanatory variables rather than from any true negative association between the employment growth of immigrants and natives. Borjas regresses log native employment, ln(Nt), on the share of foreign-born employment, pt = Mt/(Mt + Nt), across skill-state-year cells. The specification therefore includes native employment in the numerator of the dependent variable and in the denominator of the explanatory variable. This builds a negative correlation into the model that is particularly strong if the variance of Nt relative to Mt is large. To illustrate, we first show that state and city level regressions of the standardized native employment change, (Nt+10−Nt)/(Mt+Nt), on standardized immigration, (Mt+10 −Mt)/(Mt+Nt), always find a positive and mostly significant correlation between the two. Second, we randomly simulate changes in the native and foreign-born workforce with a data generating process that has zero or positive correlation between the shocks ΔMt and ΔNt (i.e., so that immigration is associated with either no change or an increase in native employment). Borjas specifications employing this simulated data estimate large and significantly negative coefficients as long as the variance of ΔNt is larger than the variance of ΔMt, which is true in observed state-level and city-level data