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How do very open economies adjust to large immigration flows? Evidence from Spanish regions

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  • González, Libertad
  • Ortega, Francesc

Abstract

We study the labor market effects of the large immigration wave in Spain between 2001 and 2006. In this period the foreign-born share increased from 6% to 13%, with a total inflow exceeding three million immigrants. Our analysis exploits the large variation in the size of immigration flows across Spain's regions. To identify causal effects, we take advantage of the fact that immigrants' location choices were strongly driven by early migrant settlements that arrived during the 1980s. We find that the relatively unskilled migration inflows did not affect the wages or employment rates of unskilled workers in the receiving regions. The growth of the unskilled labor force was absorbed mostly through increases in total employment. This increase did not originate in changes in the composition of regional output, but was instead driven by changes in skill intensity at the industry level. Regions that received a large inflow of unskilled immigrants increased the intensity of use of the now more abundant (unskilled) labor, relative to other regions. The key industries responsible for this absorption were retail, construction, hotels and restaurants and domestic services. These results are inconsistent with standard open economy models but are in line with recent empirical studies for the United States and Germany.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 1 (January)
Pages: 57-70

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Handle: RePEc:eee:labeco:v:18:y:2011:i:1:p:57-70

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Immigration Open economies Labor market Employment Instrumental variables;

References

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  1. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
  2. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration, and Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 135-69, July.
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  5. Ortega, Francesc, 2009. "Immigration, Citizenship, and the Size of Government," IZA Discussion Papers 4528, Institute for the Study of Labor (IZA).
  6. Samuel Bentolila & Juan J. Dolado & Juan F. Jimeno, 2008. "Does immigration affect the Phillips curve? Some evidence for Spain," Banco de Espa�a Working Papers 0814, Banco de Espa�a.
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  8. Joseph Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..
  9. Catalina Amuedo-Dorantes & Sara de la Rica, 2008. "Complements or Substitutes? Immigrant and Native Task Specialization in Spain," CReAM Discussion Paper Series 0816, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  10. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "Rethinking the Effects of Immigration on Wages," NBER Working Papers 12497, National Bureau of Economic Research, Inc.
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  14. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
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  18. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia.
  19. Francesc Ortega & Javier G. Polavieja, 2009. "Labor-market exposure as a determinant of attitudes toward immigration," Working Papers 2009-14, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  20. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
  21. David Card, 2004. "Is the New Immigration Really So Bad?," CReAM Discussion Paper Series 0402, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  22. Jennifer Hunt, 1992. "The impact of the 1962 repatriates from Algeria on the French labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(3), pages 556-572, April.
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Citations

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Cited by:
  1. Robert Duval-Hernandez & Ferran Martinez i Coma, 2012. "Immigrants' rights and benefits. A public opinion analysis for Spain," University of Cyprus Working Papers in Economics 15-2012, University of Cyprus Department of Economics.
  2. Muñoz de Bustillo, Rafael & Antón, José-Ignacio, 2009. "From rags to riches? Immigration and poverty in Spain," MPRA Paper 13848, University Library of Munich, Germany.
  3. Antonio Ciccone & Giovanni Peri, 2011. "Schooling Supply and the Structure of Production: Evidence from US States 1950-1990," Working Papers 595, Barcelona Graduate School of Economics.
  4. Simone Bertoli & Jesus Fernandez-Huertas Moraga & Francesc Ortega, 2010. "Crossing the Border: Self-selection, Earnings and Individual Migration Decisions," CReAM Discussion Paper Series 1011, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2011. "Accounting for changes in the Spanish wage distribution: the role of employment Composition effects," Banco de Espa�a Working Papers 1120, Banco de Espa�a.
  6. Ortega, Francesc & Polavieja, Javier G., 2012. "Labor-market exposure as a determinant of attitudes toward immigration," Labour Economics, Elsevier, vol. 19(3), pages 298-311.
  7. José-Ignacio Antón & Rafael Muñoz de Bustillo & Miguel Carrera, 2010. "From guests to hosts: immigrant-native wage differentials in Spain," International Journal of Manpower, Emerald Group Publishing, vol. 31(6), pages 645-659, September.
  8. Jesús Fernández-Huertas Moraga, 2014. "Immigrant Selection over the Business Cycle: The Spanish Boom and the Great Recession," Working Papers 2014-05, FEDEA.
  9. Ortega, Francesc & Peri, Giovanni, 2013. "Migration, Trade and Income," IZA Discussion Papers 7325, Institute for the Study of Labor (IZA).

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