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A Macroeconomic Experiment in Mass Immigration

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  • Hercowitz, Zvi
  • Yashiv, Eran

Abstract

This Paper studies the effects of mass immigration from the former USSR to Israel in the 1990s on the employment of the native-born. The exogeneity and the size of this inflow make it a ‘natural experiment’ of macroeconomic proportions. An open-economy macroeconomic model is used to analyse this experience, focusing on the differential entry of immigrants into the labour and goods markets and the ensuing dynamic implications for labour demand. The reduced form of the model – consisting of two equations for native employment and the relative price of domestic goods – is estimated, finding negative effects of immigration on native employment a year after arrival. The delay in the effect is attributed to a positive impact of immigration on the excess demand for goods and, thus, on the demand for labour earlier on.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2983.

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Date of creation: Sep 2001
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Handle: RePEc:cpr:ceprdp:2983

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Keywords: employment; immigration; open-economy macroeconomics;

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References

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  1. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 201-234 National Bureau of Economic Research, Inc.
  2. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," NBER Working Papers 3069, National Bureau of Economic Research, Inc.
  3. Richard B. Freeman, 1982. "Crime and the Labor Market," NBER Working Papers 1031, National Bureau of Economic Research, Inc.
  4. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
  5. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  6. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
  7. Joseph G. Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcomes of Natives," NBER Working Papers 3123, National Bureau of Economic Research, Inc.
  8. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, octubre-d.
  9. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  10. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
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Cited by:
  1. Jean, Sébastien & Jiménez, Miguel, 2011. "The unemployment impact of immigration in OECD countries," European Journal of Political Economy, Elsevier, vol. 27(2), pages 241-256, June.
  2. Sarit Cohen & Chang-Tai Hsieh, 2001. "Macroeconomic and Labor Market Impact of Russian Immigration in Israel," Working Papers 2001-11, Department of Economics, Bar-Ilan University.

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