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On the potential interaction between labour market institutions and immigration policies

Author

Listed:
  • Claudia Cigagna
  • Giovanni Sulis

Abstract

Purpose - – The purpose of this paper is to analyse the effect of unemployment and labour institutions such as employment protection legislation, coverage of unemployment benefits, minimum wages (MW), union power and tax wedge on migration flows. The authors allow for interactions of these institutions with migration entry laws, as both affect equilibrium wages and employment in destination countries, influencing mobility decisions of immigrants. Design/methodology/approach - – The authors use data on migration flows for a sample of 15 OECD countries over the period 1980-2006. The relationship between flows and labour institutions is analysed using OLS techniques and including destination and origin-by-year fixed effects. The coefficients of interest are identified through within country variation. The authors test the robustness of the results to different specifications using, among others, dynamic models for panel data. Findings - – The authors find strong and negative effects of unemployment, employment protection and migration policy on flows. The negative effect of migration policy on flows is larger in countries with high than in countries with low employment protection. The authors find positive effects for MW, unemployment benefits and union power. The authors show heterogeneous effects depending on the group of countries of origin and destination. Research limitations/implications - – While the identification strategy allows us to estimate the effects of interest, the baseline estimates may suffer from endogeneity problems in terms of omitted variable bias and reverse causality. The sensitivity checks provide mixed results and show that baseline estimates are not always robust to different specifications. Further work is needed to better address the problem of endogeneity. Originality/value - – The paper adds to the previous literature on the determinants of immigration flows by explicitly considering the labour market environment in destination countries. The results provide insights into potential interaction effects and coordination of reforms in labour markets and immigration policies.

Suggested Citation

  • Claudia Cigagna & Giovanni Sulis, 2015. "On the potential interaction between labour market institutions and immigration policies," International Journal of Manpower, Emerald Group Publishing Limited, vol. 36(4), pages 441-468, July.
  • Handle: RePEc:eme:ijmpps:v:36:y:2015:i:4:p:441-468
    DOI: 10.1108/IJM-11-2013-0259
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    2. Luisa Salaris & Nicola Tedesco, 2020. "Migration and the Labour Market: Ukrainian Women in the Italian Care Sector," Journal of International Migration and Integration, Springer, vol. 21(1), pages 1-20, March.
    3. Lewis, John & Swannell, Matt, 2018. "The macroeconomic determinants of migration," Bank of England working papers 729, Bank of England.

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    More about this item

    Keywords

    Determinants; Welfare; Immigration; Unemployment; Legislation; Employment protection; Collective bargaining; J61; J50; F22;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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