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How do Very Open Economies Adjust to Large Immigration Flows? Recent Evidence from Spanish Regions

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Author Info
Libertad González Luna ()
Francesc Ortega ()

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Abstract

In recent years, Spain has received unprecedented immigration flows. Between 2001 and 2006 the fraction of the population born abroad more than doubled, increasing from 4.8% to 10.8%. For Spanish provinces with above-median inflows (relative to population), immigration increased by 24% the number of high school dropouts while only increasing college graduates by 11%. We study different channels by which regional labor markets have absorbed the large increase in relative supply of low educated workers. We identify the exogenous supply shock using historical immigrant settlement patterns by country of origin. Using data from the Labor Force Survey and the decennial Census, we find a large expansion of employment in high immigration regions. Disaggregating by industry, the absorption operated through large increases in the share of low-educated workers, compared to the same industry in low-immigration regions. We do not find changes in sectoral specialization. Overall, and perhaps surprisingly, the pattern of absorption is very similar to the one found in the US.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1059.

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Date of creation: Nov 2007
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Handle: RePEc:upf:upfgen:1059

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Related research
Keywords: Immigration; Open Economies; Rybcszynski; Instrumental Variables;

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Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
F1 - International Economics - - Trade
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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  1. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia. [Downloadable!]
  2. Ethan Lewis, 2005. "Immigration, Skill Mix, and the Choice of Technique," Working Papers 05-04, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  3. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1996. "Searching for the Effect of Immigration on the Labor Market," NBER Working Papers 5454, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. David Card, 2005. "Is the New Immigration Really So Bad?," NBER Working Papers 11547, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September. [Downloadable!] (restricted)
  7. Gandal, Neil & Hanson, Gordon H. & Slaughter, M.J.Matthew J., 2004. "Technology, trade, and adjustment to immigration in Israel," European Economic Review, Elsevier, vol. 48(2), pages 403-428, April. [Downloadable!] (restricted)
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  8. Albert Saiz, 2003. "Room in the Kitchen for the Melting Pot: Immigration and Rental Prices," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 502-521, 05. [Downloadable!] (restricted)
  9. Chiswick, Barry R. & Hatton, Timothy J., 2002. "International Migration and the Integration of Labor Markets," IZA Discussion Papers 559, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Catalina Amuedo-Dorantes & Sara de la Rica, 2005. "Immigrants’ Responsiveness to Labor Market Conditions and Its Implications on Regional Disparities: Evidence from Spain," IZA Discussion Papers 1557, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "The economic value of cultural diversity: evidence from US cities," Journal of Economic Geography, Oxford University Press, vol. 6(1), pages 9-44, January. [Downloadable!] (restricted)
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  12. Friedberg, Rachel M & Hunt, Jennifer, 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. [Downloadable!] (restricted)
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  13. 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. [Downloadable!] (restricted)
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  14. Ethier, Wilfred, 1972. "Nontraded Goods and the Heckscher-Ohlin Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 132-47, February. [Downloadable!] (restricted)
  15. Hanson, Gordon H. & Slaughter, Matthew J., 2002. "Labor-market adjustment in open economies: Evidence from US states," Journal of International Economics, Elsevier, vol. 57(1), pages 3-29, June. [Downloadable!] (restricted)
  16. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December. [Downloadable!] (restricted)
  17. David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 43(2), pages 245-257, January.
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  18. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia. [Downloadable!]
  19. Leamer, E.E., 1995. "The Heckscher-Ohlin Model in Theory and Practice," Princeton Studies in International Economics 77, International Economics Section, Departement of Economics Princeton University,.
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