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Does immigration increase labour market flexibility?

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  • Røed, Marianne
  • Schøne, Pål
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    Abstract

    The question we investigate empirically in this article is whether immigration makes the labour supply in the receiving country more responsive to regional differences in economic opportunities. The main merit of the paper is that we examine three stages in the regional mobility of refugees and labour immigrants: First, the settlement pattern of newly arrived immigrants, second, their subsequent mobility between regions and, third, their eventual exit from the regional labour market to abroad. The analyses apply to immigrants who arrived in Norway from 1995 to 2004. In all three stages, mobility is investigated with regard to its responsiveness to regional differences in wages and unemployment. The main finding is that, in all three stages, the geographical mobility of immigrants is sensitive to regional economic opportunities. In that sense, immigrants do “grease the wheels” of the labour markets, through all the three stages of mobility. The most robust results are found for regional unemployment differences. With regard to natives, we generally do not find any strong evidence for “greasing the wheels” effects.

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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 19 (2012)
    Issue (Month): 4 ()
    Pages: 527-540

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    Handle: RePEc:eee:labeco:v:19:y:2012:i:4:p:527-540

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

    Related research

    Keywords: Immigrants; Regional mobility; Labour market efficiency;

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    References

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    1. Aslund, Olof, 2005. "Now and forever? Initial and subsequent location choices of immigrants," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 141-165, March.
    2. Bernt Bratsberg & Oddbjørn Raaum & Marianne Røed & Pål Schøne, 2010. "Immigration Wage Impacts by Origin," Norface Discussion Paper Series 2010002, Norface Research Programme on Migration, Department of Economics, University College London.
    3. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    4. Paul S. Davies & Michael J. Greenwood & Haizheng Li, 2001. "A Conditional Logit Approach to U.S. State-to-State Migration," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 337-360.
    5. Hatton, Timothy J. & Tani, Massimiliano, 2003. "Immigration and Inter-Regional Mobility in the UK, 1982-2000," CEPR Discussion Papers 4061, C.E.P.R. Discussion Papers.
    6. Robert J. Barro & Xavier Sala-i-Martin, 1990. "Public Finance in Models of Economic Growth," NBER Working Papers 3362, National Bureau of Economic Research, Inc.
    7. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
    8. 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.
    9. O'Keefe, Suzanne, 2004. "Locational choice of AFDC recipients within California: a conditional logit analysis," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1521-1542, July.
    10. Yuri Ostrovsky & Feng Hou & Garnett Picot, 2011. "Do Immigrants Respond to Regional Labor Demand Shocks?," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 42(1), pages 23-47, 03.
    11. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
    12. Bernt Bratsberg & Oddbjørn Raaum, 2012. "Immigration and Wages: Evidence from Construction," Economic Journal, Royal Economic Society, vol. 122(565), pages 1177-1205, December.
    13. John Kennan & James R. Walker, 2003. "The Effect of Expected Income on Individual Migration Decisions," NBER Working Papers 9585, National Bureau of Economic Research, Inc.
    14. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
    15. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
    16. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
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