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Does immigration increase labour market flexibility?

  • Røed, Marianne
  • Schøne, Pål
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    The question we investigate empirically in this article is whether immigration makes the labour supply in the receiving country more responsive to regional differences in economic opportunities. The main merit of the paper is that we examine three stages in the regional mobility of refugees and labour immigrants: First, the settlement pattern of newly arrived immigrants, second, their subsequent mobility between regions and, third, their eventual exit from the regional labour market to abroad. The analyses apply to immigrants who arrived in Norway from 1995 to 2004. In all three stages, mobility is investigated with regard to its responsiveness to regional differences in wages and unemployment. The main finding is that, in all three stages, the geographical mobility of immigrants is sensitive to regional economic opportunities. In that sense, immigrants do “grease the wheels” of the labour markets, through all the three stages of mobility. The most robust results are found for regional unemployment differences. With regard to natives, we generally do not find any strong evidence for “greasing the wheels” effects.

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    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 19 (2012)
    Issue (Month): 4 ()
    Pages: 527-540

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    Handle: RePEc:eee:labeco:v:19:y:2012:i:4:p:527-540
    Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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    1. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
    2. Aslund, Olof, 2005. "Now and forever? Initial and subsequent location choices of immigrants," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 141-165, March.
    3. Kennan,J. & Walker,J.R., 2003. "The effect of expected income on individual migration decisions," Working papers 7, Wisconsin Madison - Social Systems.
    4. Hatton, Timothy J. & Williamson, Jeffrey G, 2002. "What Fundamentals Drive World Migration?," CEPR Discussion Papers 3559, C.E.P.R. Discussion Papers.
    5. Barro, Robert J. & Sala-i-Martin, Xavier, 1992. "Public Finance in Models of Economic Growth," CEPR Discussion Papers 630, C.E.P.R. Discussion Papers.
    6. Hatton, Timothy J & Massimiliano Tani, 2003. "Immigration and Inter-Regional Mobility in the UK, 1982-2000," Royal Economic Society Annual Conference 2003 101, Royal Economic Society.
    7. Bernt Bratsberg & Oddbjorn Raaum, 2010. "Immigration and Wages: Evidence from Construction," CReAM Discussion Paper Series 1006, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    8. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
    9. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
    10. Bernt Bratsberg & Oddbjørn Raaum & Marianne Røed & Pål Schøne, 2010. "Immigration Wage Impacts by Origin," CReAM Discussion Paper Series 1030, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    11. Paul S. Davies & Michael J. Greenwood & Haizheng Li, 2001. "A Conditional Logit Approach to U.S. State-to-State Migration," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 337-360.
    12. 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.
    13. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
    14. Yuri Ostrovsky & Feng Hou & Garnett Picot, 2011. "Do Immigrants Respond to Regional Labor Demand Shocks?," Growth and Change, Wiley Blackwell, vol. 42(1), pages 23-47, 03.
    15. O'Keefe, Suzanne, 2004. "Locational choice of AFDC recipients within California: a conditional logit analysis," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1521-1542, July.
    16. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
    17. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
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