Effects of immigration in frictional labor markets: theory and empirical evidence from EU countries

Eva Moreno-Galbis and Ahmed Tritah
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Eva Moreno-Galbis: GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage
Authors registered in the RePEc Author Service: Eva Moreno Galbis

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Abstract: Immigrants are new comers in a labor market. As a consequence, they lack of social networks and other country specific and not directly productive valuable assets affecting their relative bargaining position against employers. We introduce this simple observation into a matching model of the labor market and show that immigrants increase employment prospects of competing natives. To test the predictions of our model, we exploit yearly vari- ations between 1998 and 2004 in the share of immigrants within occupations of 12 European countries. We identify the causal impact of immigrants on natives' employment rate using an instrumental variable strategy based on historical settlement patterns across host countries and occupations by origin countries. We find that natives' employment rate increases in oc- cupations and sectors receiving more immigrants. Moreover, we highlight the heterogeneity of this impact across groups of immigrants and host countries along dimensions that affect immigrants-natives relative reservation wages.

Keywords: immigration; reservation wage; assimilation; European labor markets (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mig
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Journal Article: The effects of immigration in frictional labor markets: Theory and empirical evidence from EU countries (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01100269

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