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A Macroeconomic Experiment in Mass Immigration

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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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 475.

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Length: 30 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:iza:izadps:dp475

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Keywords: immigration; open economy; natives employment;

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References

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  1. 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.
  2. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," Working Papers 633, Princeton University, Department of Economics, Industrial Relations Section..
  3. 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..
  4. 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.
  5. 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.
  6. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
  7. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  8. 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.
  9. 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.
  10. Richard B. Freeman, 1982. "Crime and the Labor Market," NBER Working Papers 1031, National Bureau of Economic Research, Inc.
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Cited by:
  1. Sébastien Jean & Miguel Jimenez, 2007. "The Unemployment Impact of Immigration in OECD Countries," OECD Economics Department Working Papers 563, OECD Publishing.
  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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