Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area

Gaetano Basso, Francesco D'Amuri and Giovanni Peri

No 25091, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the role of labor mobility in cushioning labor demand shocks in the Euro Area. We find that foreign born workers’ mobility is strongly cyclical, while this is not the case for natives. Foreigners’ higher population to employment elasticity reduces the variation of overall employment rates over the business cycle: thanks to them, the impact of a one standard deviation change in employment on employment rates decreases by 6 per cent at the country level and by 7 per cent at the regional level. Additionally, we compare Euro Area mobility to that of another currency union, the US. We find that the population to employment elasticity estimated for foreign-born persons is similar in the Euro Area and the US, while EA natives are definitely less mobile across countries than US natives are across states in response to labor demand shocks. This last result confirms that in the Euro Area there is room for improving country specific shocks absorption through higher labor mobility. It also suggests that immigration helped labor market adjustments.

JEL-codes: E32 F22 F66 J6 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-eec, nep-lab, nep-mac, nep-mig and nep-ure
Note: IFM LS
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Citations: View citations in EconPapers (8)

Published as Gaetano Basso & Francesco D’Amuri & Giovanni Peri, 2019. "Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area," IMF Economic Review, vol 67(3), pages 528-572.

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Related works:
Journal Article: Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area (2019)
Working Paper: Immigrants, labor market dynamics and adjustment to shocks in the Euro Area (2018)
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