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Editor'S Choice Labour market adjustments and migration in Europe and the United States: how different?

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  • Robert C. M. Beyer
  • Frank Smets

Abstract

We compare the labour market response to region-specific shocks in Europe and the United States and to national shocks in Europe and investigate changes over time. We employ a multilevel factor model to decompose regional labour market variables and then estimate the dynamic response of the employment level, the employment rate and the participation rate using the region-specific variables and the country factors. We find that both in Europe and in the United States labour mobility accounts for about 50% of the long-run adjustment to region-specific labour demand shocks and only a little more in the United States than in Europe, where adjustment takes twice as long. In Europe, labour mobility is a less important adjustment mechanism in response to country-specific labour demand shocks that cause stronger and more persistent reactions of the employment and the participation rate. However, we detect a convergence of the adjustment processes in Europe and the United States, reflecting both a fall in interstate migration in the United States and a rise in the role of migration in Europe. Finally, we show that part of the difference between Europe and the United States in previous studies may be due to the use of different data sources.

Suggested Citation

  • Robert C. M. Beyer & Frank Smets, 2015. "Editor'S Choice Labour market adjustments and migration in Europe and the United States: how different?," Economic Policy, CEPR;CES;MSH, vol. 30(84), pages 643-682.
  • Handle: RePEc:oup:ecpoli:v:30:y:2015:i:84:p:643-682.
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    File URL: http://hdl.handle.net/10.1093/epolic/eiv011
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    Cited by:

    1. Mathä, Thomas Y. & Millard, Stephen & Rõõm, Tairi & Wintr, Ladislav & Wyszyński, Robert, 2019. "Shocks and labour cost adjustment: evidence from a survey of European firms," Working Paper Series 2269, European Central Bank.
    2. Alfonso Arpaia & Aron Kiss & Balazs Palvolgyi & Alessandro Turrini, 2016. "Labour mobility and labour market adjustment in the EU," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-21, December.
    3. Marius Clemens & Guillaume Claveres, 2017. "Unemployment Insurance Union," 2017 Meeting Papers 1340, Society for Economic Dynamics.
    4. Guilherme Bandeira & Jordi Caballe & Eugenia Vella, 2019. "Fiscal Austerity and Migration: A Missing Link," Working Papers 2019009, The University of Sheffield, Department of Economics.
    5. Miriam Mutambudzi & Zulqarnain Javed, 2016. "Job Strain as a Risk Factor for Incident Diabetes Mellitus in Middle and Older Age U.S. Workers," Journals of Gerontology: Series B, Gerontological Society of America, vol. 71(6), pages 1089-1096.
    6. Michael Amior & Alan Manning, 2018. "The Persistence of Local Joblessness," American Economic Review, American Economic Association, vol. 108(7), pages 1942-1970, July.
    7. Julia Jauer & Thomas Liebig & John P. Martin & Patrick A. Puhani, 2019. "Migration as an adjustment mechanism in the crisis? A comparison of Europe and the United States 2006–2016," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 1-22, January.
    8. Florence Huart & Médédé Tchakpalla, 2019. "Labor Market Conditions and Geographic Mobility in the Eurozone," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(2), pages 263-284, June.
    9. Michael Amior & Alan Manning, 2019. "Commuting, Migration and Local Joblessness," CEP Discussion Papers dp1623, Centre for Economic Performance, LSE.
    10. Gaetano Basso & Francesco D'Amuri & Giovanni Peri, 2018. "Immigrants, labor market dynamics and adjustment to shocks in the Euro Area," Temi di discussione (Economic working papers) 1195, Bank of Italy, Economic Research and International Relations Area.
    11. repec:tpr:restat:v:99:y:2017:i:2:p:243-257 is not listed on IDEAS
    12. Plamen Nikolov & Paolo Pasimeni, 2019. "Fiscal Stabilization in the United States: Lessons for Monetary Unions," Economics Working Paper Archive wp_926, Levy Economics Institute.
    13. László Andor, 2016. "Towards shared unemployment insurance in the euro area," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-15, December.

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