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Do Immigrants Affect Labor Market Disparities?

  • Muhammad Asali

    ()

    (International School of Economics at Tbilisi State University )

This study exploits the natural experiment, provided by the start of the second intifada, to measure the effect of immigration on labor market outcomes of Israeli-Arabs and Jews. It finds that Immigrants of different origins, Palestinians versus Foreigners, have different effects on the labor market, and these effects are experienced differently by different native groups, suggesting that the degree of substitution with native workers varies between groups. More specifically, a 10% foreign-worker-induced increase in the supply in a particular industry reduces the wage of Arabs by about 1%, while having no effect on Jewish wages. Palestinian-induced increase in the supply in a particular industry, in contrast, has the opposite effect: it reduces the wage of Jewish workers by about 1% but increases the wage of Arabs by 2.5%. Employment opportunities of either Arabs or Jews are not significantly affected by foreign workers, but are harmed by Palestinian influxes (in the scale of 1.5% for Arabs and 0.5% for Jews, for a 10% Palestinian-induced increase in the supply in a particular industry). Simulation analyses show that immigration of Palestinians and foreign workers together explain 7.6% of the increase in the wage gap between Israeli Arabs and Jews in the 1990s. They provide no explanation for changes in the employment gap.

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File URL: http://www.iset.ge/files/013-08.pdf
File Function: First version, 2008
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Paper provided by International School of Economics at TSU, Tbilisi, Republic of Georgia in its series Working Papers with number 013-08.

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Length: 63 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:tbs:wpaper:08-013
Contact details of provider: Web page: http://www.iset.ge/

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  1. David Card, 1996. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Working Papers 747, Princeton University, Department of Economics, Industrial Relations Section..
  2. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, December.
  3. Angrist, Joshua D, 1996. "Short-Run Demand for Palestinian Labor," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 425-53, July.
  4. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages F300-F323, November.
  5. Finis Welch, 2003. "Catching Up: Wages of Black Men," American Economic Review, American Economic Association, vol. 93(2), pages 320-325, May.
  6. Jennifer Hunt, 1992. "The impact of the 1962 repatriates from Algeria on the French labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(3), pages 556-572, April.
  7. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
  8. Joseph Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..
  9. David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
  10. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  11. Locher, Lilo, 2004. "Immigration from the former Soviet Union to Israel: Who is coming when?," European Economic Review, Elsevier, vol. 48(6), pages 1243-1255, December.
  12. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
  13. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
  14. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2006. "Immigration and African-American Employment Opportunities: The Response of Wages, Employment, and Incarceration to Labor Supply Shocks," NBER Working Papers 12518, National Bureau of Economic Research, Inc.
  15. Findlay, Ronald & Lundahl, Mats, 1987. "Racial discrimination, dualistic labor markets and foreign investment," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 139-148, October.
  16. Amitabh Chandra, 2000. "Labor-Market Dropouts and the Racial Wage Gap: 1940-1990," American Economic Review, American Economic Association, vol. 90(2), pages 333-338, May.
  17. Jennifer Hunt, 1992. "The Impact of the 1962 Repatriates from Algeria on the French Labor Market," ILR Review, Cornell University, ILR School, vol. 45(3), pages 556-572, April.
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