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How Immigrants Helped EU Labor Markets to Adjust during the Great Recession

Listed author(s):
  • Kahanec, Martin

    ()

    (Central European University)

  • Guzi, Martin

    ()

    (Masaryk University)

The economic literature starting with Borjas (2001) suggests that immigrants are more flexible than natives in responding to changing sectoral, occupational, and spatial shortages in the labor market. In this paper, we study the relative responsiveness to labor shortages by immigrants from various origins, skills and tenure in the country vis-à-vis the natives, and how it varied over the business cycle during the Great Recession. We show that immigrants in general have responded to changing labor shortages across EU member states, occupations and sectors more fluidly than natives. This effect is especially significant for low-skilled immigrants from the new member states or with the medium number of years since immigration, as well as with high-skilled immigrants with relatively few (1-5) or many (11+) years since migration. The relative responsiveness of some immigrant groups declined during the crisis years (those from Europe outside the EU or with eleven or more years since migration), whereas other groups of immigrants became particularly fluid during the Great Recession, such as those from new member states. Our results suggest immigrants may play an important role in labor adjustment during times of asymmetric economic shocks, and support the case for well-designed immigration policy and free movement of workers within the EU. Paper provides new insights into the functioning of the European Single Market and the roles various immigrant groups play for its stabilization through labor adjustment during times of uneven economic development across sectors, occupations, and countries.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10443.

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Length: 28 pages
Date of creation: Dec 2016
Publication status: published in: International Journal of Manpower, 2017, 38 (7), 996-1015. Article
Handle: RePEc:iza:izadps:dp10443
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  1. Dustmann, Christian & Glitz, Albrecht & Vogel, Thorsten, 2010. "Employment, wages, and the economic cycle: Differences between immigrants and natives," European Economic Review, Elsevier, vol. 54(1), pages 1-17, January.
  2. 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.
  3. Constant, Amelie F. & Gataullina, Liliya & Zimmermann, Klaus F., 2009. "Ethnosizing immigrants," Journal of Economic Behavior & Organization, Elsevier, vol. 69(3), pages 274-287, March.
  4. Alfonso Arpaia & Aron Kiss & Balazs Palvolgyi & Alessandro Turrini, 2016. "Labour mobility and labour market adjustment in the EU," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-21, December.
  5. Martin Kahanec, 2009. "Labor market outcomes of immigrants and non-citizens in the EU: An East-West comparison," International Journal of Manpower, Emerald Group Publishing, vol. 30(1/2), pages 97-115, March.
  6. Guzi, Martin & Kahanec, Martin & Kureková, Lucia Mýtna, 2015. "How Immigration Grease Is Affected by Economic, Institutional and Policy Contexts: Evidence from EU Labor Markets," IZA Discussion Papers 9108, Institute for the Study of Labor (IZA).
  7. Catalina Amuedo-Dorantes & Sara De la Rica, 2010. "Immigrants’ responsiveness to labor market conditions and their impact on regional employment disparities: evidence from Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(4), pages 387-407, September.
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