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The effect of mass influx on labor markets: Portuguese 1974 evidence revisited

Erik Mäkelä

European Economic Review, 2017, vol. 98, issue C, 240-263

Abstract: This paper provides a reappraisal of the evidence from the influx that has been unique in the recent European history, the flood of half a million returnees from Mozambique and Angola to Portugal in the mid-1970s. The objective of this paper is to study the impacts of a large supply shock on aggregate labor productivity, wages and unemployment. In contrast to the previous evidence, the synthetic control analyses find that the influx had a significant adverse effect on labor market outcomes. The results suggest that the Portuguese labor market responded precisely the same way as the standard textbook model predicts: an increase in the number of workers lowered average labor productivity and wages.

Keywords: Synthetic control method; Labor markets; Labor supply; Immigration (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:eecrev:v:98:y:2017:i:c:p:240-263