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Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area

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  • Gaetano Basso
  • Francesco D'Amuri
  • Giovanni Peri

Abstract

We analyze the role of labor mobility in cushioning labor demand shocks in the Euro Area. We find that foreign born workers’ mobility is strongly cyclical, while this is not the case for natives. Foreigners’ higher population to employment elasticity reduces the variation of overall employment rates over the business cycle: thanks to them, the impact of a one standard deviation change in employment on employment rates decreases by 6 per cent at the country level and by 7 per cent at the regional level. Additionally, we compare Euro Area mobility to that of another currency union, the US. We find that the population to employment elasticity estimated for foreign-born persons is similar in the Euro Area and the US, while EA natives are definitely less mobile across countries than US natives are across states in response to labor demand shocks. This last result confirms that in the Euro Area there is room for improving country specific shocks absorption through higher labor mobility. It also suggests that immigration helped labor market adjustments.

Suggested Citation

  • Gaetano Basso & Francesco D'Amuri & Giovanni Peri, 2018. "Immigrants, Labor Market Dynamics and Adjustment to Shocks in the Euro Area," NBER Working Papers 25091, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25091
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Euro Area in the Age of COVID-19
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2020-05-17 11:53:03

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    1. Amior, Michael, 2020. "The contribution of immigration to local labor market adjustment," LSE Research Online Documents on Economics 108419, London School of Economics and Political Science, LSE Library.
    2. Gaetano Basso & Giovanni Peri, 2020. "Internal Mobility: The Greater Responsiveness of Foreign-Born to Economic Conditions," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 77-98, Summer.
    3. Braun, Sebastian Till & Weber, Henning, 2021. "How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany," Journal of International Economics, Elsevier, vol. 129(C).
    4. Concetta Rondinelli & Roberta Zizza, 2020. "Spend today or spend tomorrow? The role of inflation expectations in consumer behaviour," Temi di discussione (Economic working papers) 1276, Bank of Italy, Economic Research and International Relations Area.
    5. Gaetano Basso & Giovanni Peri & Ahmed S. Rahman, 2020. "Computerization and immigration: Theory and evidence from the United States," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1457-1494, November.
    6. Kohler, Wilhelm & Müller, Gernot J. & Wellmann, Susanne, 2021. "Risk sharing in currency unions: The migration channel," University of Tübingen Working Papers in Business and Economics 144, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    7. Kohler, Wilhelm & Müller, Gernot J. & Wellmann, Susanne, 2021. "Risk sharing in currency unions: The migration channel," University of Tübingen Working Papers in Business and Economics 144, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    8. Mariani, Rama Dasi & Pasquini, Alessandra & Rosati, Furio C., 2020. "Elementary Facts about Immigration in Italy: What Do We Know about Immigration and Its Impact?," IZA Discussion Papers 13181, Institute of Labor Economics (IZA).
    9. Massimo Anelli & Gaetano Basso & Giuseppe Ippedico & Giovanni Peri, 2019. "Youth Drain, Entrepreneurship and Innovation," NBER Working Papers 26055, National Bureau of Economic Research, Inc.
    10. Mistura Rufai & Adebayo Ogunniyi & Kabir Kayode Salman & Motunrayo Oyeyemi & Mutiat Salawu, 2019. "Migration, Labor Mobility and Household Poverty in Nigeria: A Gender Analysis," Economies, MDPI, Open Access Journal, vol. 7(4), pages 1-24, October.
    11. Bernt Bratsberg & Oddbjørn Raaum & Knut Røed, 2021. "Excess churn in integrated labor markets," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 865-892, July.
    12. Benjamín García & Juan Guerra-Salas, 2020. "On the Response of Inflation and Monetary Policy to an Immigration Shock," Working Papers Central Bank of Chile 872, Central Bank of Chile.
    13. Persyn, Damiaan, 2021. "Aggregation bias in wage rigidity estimation," MPRA Paper 106464, University Library of Munich, Germany.
    14. Edoardo Di Porto & Enrica Maria Martino & Paolo Naticchioni, 2018. "Back to Black? The Impact of Regularizing Migrant Workers," CSEF Working Papers 517, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    15. Damiaan Persyn, 2020. "Spatial aggregation bias in wage curve and NAWRU estimation," JRC Working Papers on Territorial Modelling and Analysis 2020-02, Joint Research Centre (Seville site).

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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