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A Macroeconomic Experiment in Mass Immigration

Author

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  • Hercowitz, Zvi

    (Tel Aviv University)

  • Yashiv, Eran

    (Tel Aviv University)

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 analyze this experience, focusing on the differential entry of immigrants into the labor and goods markets and the ensuing dynamic implications for labor 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 labor earlier on.

Suggested Citation

  • Hercowitz, Zvi & Yashiv, Eran, 2002. "A Macroeconomic Experiment in Mass Immigration," IZA Discussion Papers 475, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp475
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    Cited by:

    1. Christian Dustmann & Uta Schönberg & Jan Stuhler, 2017. "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(1), pages 435-483.
    2. Alexandra M. Espinosa & Ignacio Díaz-Emparanza, 2021. "The Long-term Relationship Between International Labour Migration and Unemployment in Spain," Journal of International Migration and Integration, Springer, vol. 22(1), pages 145-166, March.
    3. 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.
    4. Almosova, Anna, 2013. "Labor Market Institutions and The Effect of Immigration on National Employment," MPRA Paper 49785, University Library of Munich, Germany, revised 12 Sep 2013.
    5. Douglas Gollin & Fabian Lange, 2013. "Equipping immigrants: migration flows and capital movements in small open economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 749-777, December.
    6. Chletsos Michael & Roupakias Stelios, 2019. "Do Immigrants Compete with Natives in the Greek Labour Market? Evidence from the Skill-Cell Approach before and during the Great Recession," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-30, April.
    7. Sarit Cohen & Chang-Tai Hsieh, 2001. "Macroeconomic and Labor Market Impact of Russian Immigration in Israel," Working Papers 2001-11, Bar-Ilan University, Department of Economics.
    8. Nannestad, Peter, 2007. "Immigration and welfare states: A survey of 15 years of research," European Journal of Political Economy, Elsevier, vol. 23(2), pages 512-532, June.
    9. Leonardo Becchetti & Berkan Acar, 2021. "Public Opinion Views on Immigrants’ Contribution to the Local Economy: the Role of TV Exposure," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(3), pages 509-532, November.
    10. Karnit Flug & Michel Strawczynski, 2007. "Persistent Growth Episodes and Macroeconomic Policy Performance in Israel," Bank of Israel Working Papers 2007.08, Bank of Israel.

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    More about this item

    Keywords

    immigration; open economy; natives employment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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