IDEAS home Printed from https://ideas.repec.org/p/cns/cnscwp/201319.html
   My bibliography  Save this paper

On the potential interaction between labour market institutions and immigration policies

Author

Listed:
  • C. Cigagna
  • G. Sulis

    ()

Abstract

Purpose – We analyse the effect of unemployment and labour institutions such as employment protection legislation, coverage of unemployment benefits, minimum wages, union power and tax wedge on migration flows. We allow for interactions of these institutions with migration entry laws, as both affect equilibrium wages and employment in destination countries, influencing mobility decisions of immigrants. Design/methodology/approach – We use data on migration flows for a sample of 15 OECD countries over the period 1980-2006. The relationship between flows and labour institutions is analysed using OLS techniques and including destination and origin-by-year fixed effects. The coefficients of interest are identified through within country variation. We test the robustness of our results to different specifications using, among others, dynamic models for panel data. Findings – We find strong and negative effects of unemployment, employment protection and migration policy on flows. The negative effect of migration policy on flows is larger in countries with high than in countries with low employment protection. We find positive effects for minimum wages, unemployment benefits and union power. We show heterogeneous effects depending on the group of countries of origin and destination. Research limitations/implications – While the identification strategy allows us to estimate the effects of interest, our baseline estimates may suffer from endogeneity problems in terms of omitted variable bias and reverse causality. Our sensitivity checks provide mixed results and show that baseline estimates are not always robust to different specifications. Further work is needed to better address the problem of endogeneity. Originality/value – The paper adds to the previous literature on the determinants of immigration flows by explicitly considering the labour market environment in destination countries. Our results provide insights into potential interaction effects and coordination of reforms in labour markets and immigration policies.

Suggested Citation

  • C. Cigagna & G. Sulis, 2013. "On the potential interaction between labour market institutions and immigration policies," Working Paper CRENoS 201319, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:201319
    as

    Download full text from publisher

    File URL: http://crenos.unica.it/crenos/node/6384
    Download Restriction: no

    File URL: http://crenos.unica.it/crenos/sites/default/files/WP13-19_0.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries," Economic Policy, CEPR;CES;MSH, vol. 24, pages 349-402, April.
    2. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
    3. Peri, Giovanni & D'Amuri, Francesco, 2010. "Immigration, Jobs and Employment Protection: Evidence from Europe," Institute of European Studies, Working Paper Series qt9rp2j8m1, Institute of European Studies, UC Berkeley.
    4. Bertola, Giuseppe & Rogerson, Richard, 1997. "Institutions and labor reallocation," European Economic Review, Elsevier, vol. 41(6), pages 1147-1171, June.
    5. Alícia Adserà & Mariola Pytliková, 2015. "The Role of Language in Shaping International Migration," Economic Journal, Royal Economic Society, vol. 125(586), pages 49-81, August.
    6. Assaf Razin & Jackline Wahba, 2015. "Welfare Magnet Hypothesis, Fiscal Burden, and Immigration Skill Selectivity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 369-402, April.
    7. Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2013. "Multilateral resistance to migration," Journal of Development Economics, Elsevier, vol. 102(C), pages 79-100.
    8. Saint-Paul, Gilles, 2002. "Employment protection, international specialization, and innovation," European Economic Review, Elsevier, vol. 46(2), pages 375-395, February.
    9. Conti, Maurizio & Sulis, Giovanni, 2016. "Human capital, employment protection and growth in Europe," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 213-230.
    10. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    11. Brücker, Herbert & Hauptmann, Andreas & Jahn, Elke J. & Upward, Richard, 2014. "Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK," European Economic Review, Elsevier, vol. 66(C), pages 205-225.
    12. Corrado Giulietti & Martin Guzi & Martin Kahanec & Klaus F. Zimmermann, 2013. "Unemployment benefits and immigration: evidence from the EU," International Journal of Manpower, Emerald Group Publishing, vol. 34(1), pages 24-38, March.
    13. Martin Schindler & Mariya Aleksynska, 2011. "Labor Market Regulations in Low-, Middle- and High-Income Countries; A New Panel Database," IMF Working Papers 11/154, International Monetary Fund.
    14. De Giorgi, Giacomo & Pellizzari, Michele, 2009. "Welfare migration in Europe," Labour Economics, Elsevier, vol. 16(4), pages 353-363, August.
    15. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
    16. Bertoli, S. & Fernández-Huertas Moraga, J. & Ortega, F., 2013. "Crossing the border: Self-selection, earnings and individual migration decisions," Journal of Development Economics, Elsevier, vol. 101(C), pages 75-91.
    17. Wido Geis & Silke Uebelmesser & Martin Werding, 2013. "How do Migrants Choose Their Destination Country? An Analysis of Institutional Determinants," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 825-840, November.
    18. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
    19. Rémi BAZILLIER & Yasser Moullan, 2010. "Employment Protection and Migration," LEO Working Papers / DR LEO 533, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    20. Joan Llull, 2016. "Understanding international migration: evidence from a new dataset of bilateral stocks (1960–2000)," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(2), pages 221-255, June.
    21. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    22. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1249-1274, September.
    23. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    24. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lewis, John & Swannell, Matt, 2018. "The macroeconomic determinants of migration," Bank of England working papers 729, Bank of England.

    More about this item

    Keywords

    migration policies; Migration flows; labour market institutions; gravity model;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cns:cnscwp:201319. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antonello Pau). General contact details of provider: http://edirc.repec.org/data/crenoit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.