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The Causes and Effects of International Labor Mobility: Evidence from OECD Countries 1980-2005

  • Ortega, Francesc
  • Peri, Giovanni

This paper contains three important contributions to the literature on international migrations. First, it compiles a new dataset on migration flows and stocks and on immigration laws for 14 OECD destination countries and 74 sending countries for each year over the period 1980-2005. Second, it extends the empirical model of migration choice across multiple destinations, developed by Grogger and Hanson (2008), by allowing for unobserved individual heterogeneity between migrants and non-migrants. We use the model to derive a pseudo-gravity empirical specification of the economic and legal determinants of international migration. Our estimates show that bilateral migration flows are increasing in the income per capita gap between origin and destination. We also find that bilateral flows decrease significantly when the destination countries adopt stricter immigration laws. Third, we estimate the impact of immigration flows on employment, investment and productivity in the receiving OECD countries using as instruments the ”push” factors only in the gravity equation. We find that immigration increases employment one for one, implying no crowding-out of natives. In addition, investment responds rapidly and vigorously, and total factor productivity is not affected. These results imply that immigration increases the total GDP of the receiving country in the short-run one-for-one, without affecting average wages or labor productivity. We also find that the effects of immigration are less beneficial when the receiving economy is in bad economic times.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19183.

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Date of creation: 01 Mar 2009
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Handle: RePEc:pra:mprapa:19183
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  1. David Karemera & Victor Iwuagwu Oguledo & Bobby Davis, 2000. "A gravity model analysis of international migration to North America," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1745-1755.
  2. 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.
  3. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  4. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2006. "The impact of immigration on the structure of male wages: theory and evidence from Britain," LSE Research Online Documents on Economics 19797, London School of Economics and Political Science, LSE Library.
  5. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  6. Douglas Gollin & Fabian Lange, 2008. "Equipping Immigrants: Migration Flows and Capital Movements," Center for Development Economics 2008-05, Department of Economics, Williams College.
  7. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
  8. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  9. Anna Maria Mayda, 2007. "International migration: A panel data analysis of the determinants of bilateral flows," CReAM Discussion Paper Series 0707, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  10. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
  11. Graziella Bertocchi & Chiara Strozzi, 2008. "International migration and the role of institutions," Public Choice, Springer, vol. 137(1), pages 81-102, October.
  12. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
  13. Ortega, Francesc, 2009. "Immigration, Citizenship, and the Size of Government," IZA Discussion Papers 4528, Institute for the Study of Labor (IZA).
  14. Rubinstein, Yona & Helpman, Elhanan & Melitz, Marc, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," Scholarly Articles 3228230, Harvard University Department of Economics.
  15. 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, Oxford University Press, vol. 118(4), pages 1335-1374.
  16. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers 252, Centro Studi Luca d'Agliano, University of Milano.
  17. Bertocchi, Graziella & Strozzi, Chiara, 2007. "The Evolution of Citizenship: Economic and Institutional Determinants," CEPR Discussion Papers 6066, C.E.P.R. Discussion Papers.
  18. Gianmarco I.P. Ottaviano & Giovanni Peri, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," NBER Working Papers 14188, National Bureau of Economic Research, Inc.
  19. James Dolmas & Gregory W. Huffman, 1997. "On the political economy of immigration," Working Papers 9706, Federal Reserve Bank of Dallas.
  20. George J. Borjas & Lawrence F. Katz, 2005. "The Evolution of the Mexican-Born Workforce in the United States," NBER Working Papers 11281, National Bureau of Economic Research, Inc.
  21. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
  22. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2007. "Do Interest Groups Affect Immigration?," IZA Discussion Papers 3183, Institute for the Study of Labor (IZA).
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