nep-mig New Economics Papers
on Economics of Human Migration
Issue of 2012‒07‒14
sixteen papers chosen by
Yuji Tamura
Australian National University

  1. How Immigration May Affect U.S. Native Entrepreneurship: Theoretical Building Blocks and Preliminary Results By Duleep, Harriet; Jaeger, David A.; Regets, Mark
  2. Overeducation among Immigrants in Sweden: Incidence, Wage Effects and State-Dependence By Andersson Joona, Pernilla; Datta Gupta, Nabanita; Wadensjö, Eskil
  3. Migration and Imperfect Labor Markets: Theory and Cross-country Evidence from Denmark, Germany and the UK By Herbert Brücker; Elke Jahn; Richard Upward
  4. Immigrants in Risky Occupations By Orrenius, Pia M.; Zavodny, Madeline
  5. One Way the Demand for Labor May Adapt to the Availability of Labor By Duleep, Harriet
  6. Kick It Like Özil? Decomposing the Native-Migrant Education Gap By Krause, Annabelle; Rinne, Ulf; Schüller, Simone
  7. Relocation, mobility and migration: the dynamics of workers and firms in the Netherlands. By Kronenberg, Kristin
  8. Internal Migration and its Impact on Reducing Inter-communal Disparities in Chile By Carlos Villalobos Barría
  9. Immigrant Homeownership and Immigration Status: Evidence from Spain By Amuedo-Dorantes, Catalina; Mundra, Kusum
  10. Native-immigrant wage differentials in Greece: discrimination and assimilation By Chletsos, Michael; Roupakias, Stelios
  11. Migration of Skilled Workers: Policy Interaction between Host and Source Countries By Slobodan Djajic, Michael S. Michael and Alexandra Vinogradova
  12. Immigration, Unemployment and Growth: Empirical Evidence from Greece By Chletsos, Michael; Roupakias, Stelios
  13. The impact of immigration on the greek labor market By Chletsos, Michael; Roupakias, Stelios
  14. Immigration and Structural Change: Evidence from Post-War Germany By Braun, Sebastian; Kvasnicka, Michael
  15. Competition for Migrants in a Federation: Tax or Transfer Competition? By Marko Koethenbuerger
  16. The Macroeconomic Impact of Remittances: A sending country perspective By Timo Baas; Silvia Maja Melzer

  1. By: Duleep, Harriet (College of William and Mary); Jaeger, David A. (CUNY Graduate Center); Regets, Mark (National Science Foundation)
    Abstract: This paper describes the theoretical underpinnings and provides empirical evidence for a model that predicts a positive impact of immigration on entrepreneurial activity. Immigrants, we hypothesize, facilitate innovation and entrepreneurship by being willing and able to invest in new skills. At the heart of this theoretical prediction is the observation that human capital not immediately valued in the U.S. labor market is useful for learning new skills. Because immigrants face a lower opportunity cost of investing in new skills or methods, this "transfer" of source-specific skills to the U.S. may lead immigrants to be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants (even if they are not self-employed) may prove to be areas in which entrepreneurship and innovation are easier to accomplish. Our theory offers a unique perspective on the contributions of immigrants to economic development beyond traditional perspectives that focus on low-cost immigrant labor or immigrant entrepreneurship.
    Keywords: immigration, innovation, entrepreneurship, human capital investment, skill transferability, opportunity cost, learning transferability
    JEL: J15 J24 J39 J61 L26
    Date: 2012–06
  2. By: Andersson Joona, Pernilla (SOFI, Stockholm University); Datta Gupta, Nabanita (University of Aarhus); Wadensjö, Eskil (Stockholm University)
    Abstract: The utilization and reward of the human capital of immigrants in the labor market of the host country has been studied extensively. In the Swedish context this question is of great policy relevance due to the high levels of refugee migration and inflow of tied movers. Using Swedish register data covering the period 2001-2008, we analyze the incidence and wage effects of overeducation among non-Western immigrants. We also analyze whether there is state-dependence in overeducation and extend the immigrant educational mismatch literature by investigating whether this is a more severe problem among immigrants than among natives. In line with previous research we find that the incidence of overeducation is higher among immigrants and the return to overeducation is lower indicating that immigrants lose more from being overeducated. We find a high degree of state-dependence in overeducation both among natives and immigrants, but to a higher extent among immigrants.
    Keywords: educational mismatch, immigrants, wages, state-dependence
    JEL: J61 I21 J24 J31 F22
    Date: 2012–06
  3. By: Herbert Brücker (University of Bamberg, IAB Nürnberg, and IZA Bonn); Elke Jahn (IAB Nürnberg, Arhus University, and IZA Bonn); Richard Upward (University of Nottingham)
    Abstract: We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that wage flexibility is substantially higher in the UK compared to Germany and, in particular, Denmark. As a consequence, immigration has a much larger effect on the unemployment rate in Germany and Denmark, while the wage effects are larger in the UK. Moreover, the elasticity of substitution between natives and foreign workers is high in the UK and particularly low in Germany. Thus, the preexisting foreign labor force suffers more from further immigration in Germany than in the UK.
    Keywords: immigration, unemployment, wages, labor markets, panel data, comparative studies.
    JEL: F22 J31 J61
    Date: 2012–07
  4. By: Orrenius, Pia M. (Federal Reserve Bank of Dallas); Zavodny, Madeline (Agnes Scott College)
    Abstract: This chapter reviews the economics literature on immigrant-native differentials in occupational risk. It begins by briefly explaining the theory of compensating wage differentials. It then provides a more detailed discussion of the empirical evidence on the subject, which reaches several conclusions. First, immigrants are overrepresented in occupations and industries with higher injury and fatality rates. Second, immigrants have higher work-related injury and fatality rates in some advanced economies, but not all. Finally, most, but not all, immigrants appear to earn risk premiums similar to natives for working in risky jobs. The chapter closes with a discussion of areas where additional research is needed.
    Keywords: immigrants, risky jobs, compensating differentials
    JEL: J15 J61 J81
    Date: 2012–06
  5. By: Duleep, Harriet (College of William and Mary)
    Abstract: This paper presents and tests a model that may partially explain why the demand for labor adapts to the availability of labor. In particular, I postulate that the cost of hiring declines with increases in the amount of labor available. The cost of hiring would decrease with a growth in available labor for two reasons: (1) individuals seeking employment would be coming to employers instead of the latter seeking them out and (2) the larger set of potential employees would increase the probability of employers finding individuals suitable for unfilled jobs. Moreover, individuals seeking employment may engender employers to think of new ways in which labor can be used. An increase in the number of entrants to the labor force would lower the cost of hiring and increase employment demand at any given wage rate. Hence, a change in the labor force – such as the addition of women or immigrants – does not increase unemployment as much as is predicted for current workers because demand for labor increases as the cost of hiring decreases. The paper may provide some insight into the relationship between the size of the labor force and employment demand as recently highlighted by Stock and Watson in their examination of the 2007-2009 recession.
    Keywords: labor demand, labor supply, cost of hiring
    JEL: J23 J21 J11 J32
    Date: 2012–06
  6. By: Krause, Annabelle (IZA); Rinne, Ulf (IZA); Schüller, Simone (IZA)
    Abstract: We investigate second generation migrants and native children at several stages in the German education system to analyze the determinants of the persistent native-migrant gap. One part of the gap can be attributed to differences in socioeconomic background and another part remains unexplained. Faced with this decomposition problem, we apply linear and matching decomposition methods. Accounting for differences in socioeconomic background, we find that migrant pupils are just as likely to receive recommendations for or to enroll at any secondary school type as native children. Comparable natives, in terms of family background, thus face similar difficulties as migrant children. Our results point at more general inequalities in secondary schooling in Germany which are not migrant-specific.
    Keywords: migration, education, human capital, Germany, tracking
    JEL: J15 J24 I21
    Date: 2012–06
  7. By: Kronenberg, Kristin (Maastricht University)
    Date: 2012
  8. By: Carlos Villalobos Barría (Georg-August-Universität Göttingen)
    Abstract: Based on the affirmation that internal migration in Chile has become increasingly less important as an equalizing mechanism for regional disparities, this paper aims to look at the causes of such immobility. The estimation procedure allows for obtaining a non-endogenous potential wage differential which controls for the selectivity process involved in the migration decision (based on observed and unobserved characteristics). This study finds that the productivity differential is the leading factor explaining migration. However, migration not only depends on individual characteristics, but strongly relies on the level of household education. Unfortunately, the initial disadvantages related to the household background determine that the one who faces attractive potential wage differentials is at the same time constrained by its household. The conclusion is that household-related migration costs are a source of inefficiency in labour allocation. Consequently, supporting the infrastructure in the rural economy is not the only way to achieve convergence across the territory. Subsidies aimed to reduce migration costs can be also considered in a framework oriented towards encouraging functional migration flows.
    Keywords: migration, labour earnings , self-selection, labour markets
    JEL: R23 J31 J61
    Date: 2012–07–06
  9. By: Amuedo-Dorantes, Catalina (San Diego State University, California); Mundra, Kusum (Rutgers University)
    Abstract: Because of the many advantages of homeownership for immigrants and for the communities where immigrants reside, a variety of countries have implemented policies that facilitate immigrant homeownership. Although these policies hinge on immigration status, the link between immigration status and homeownership is yet to be carefully explored. Using a recent survey of immigrants in Spain, we find that permanent residents from the EU15 enjoy the highest homeownership rates, even after accounting for a wide range of individual and family characteristics known to impact housing ownership. Permanent residents from countries outside the EU15, temporary residents and undocumented immigrants are, respectively, 12 percentage-points, 29 percentage-points and 33 percentage-points less likely to own a home than permanent residents from the EU15. Overall, the findings highlight the differences in homeownership by immigrant status, possibly reflecting differences in cultural adaptation and integration across immigrants in host country.
    Keywords: immigrant homeownership, immigration status, Spain
    JEL: R21 J61
    Date: 2012–06
  10. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: Abstract: This paper applies the Blinder-Oaxaca methodology in order to decompose the average earnings differentials between Greek workers and different groups of immigrants. We use information about 8,429 individuals of which 1,185 are immigrants. The data are drawn from the Greek Labor Force Survey (2009). The main objective is to explore how much of the differential is explained by differences in observed characteristics. We also investigate the effect that assimilation has on the immigrants’ earnings. Our results provide empirical evidence that the part of the wage gap due to differences in the coefficients is largest for immigrants originating from non-EU countries and negative for those immigrants who terminated education in Greece.
    Keywords: immigration; discrimination; assimilation
    JEL: J71 J61
    Date: 2012–07–05
  11. By: Slobodan Djajic, Michael S. Michael and Alexandra Vinogradova
    Abstract: This paper examines the interaction between policies of the host and source countries in the context of a model of skilled-worker migration. The host country aims to provide low-cost labor for its employers while also taking into consideration the fiscal burden of providing social services to migrant workers and their dependants. It optimizes by setting a time limit on the duration of a guest-worker's permit. The source country seeks to maximize its own welfare by optimally choosing the amount of training it offers to its citizens, some of whom may end up working abroad. Within this framework, we solve for the Nash equilibrium values of the policy instruments and compare them with the case where both countries cooperate to maximize joint welfare.
    Keywords: Temporary Migration, Skilled Labor, Immigration Policy
    Date: 2012–06
  12. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: This paper applies cointegration analysis and Granger non-causality tests in order to identify the direction of causality between migration in Greece and two macroeconomic variables: real per capita GDP and unemployment. We use annual data for the period 1980-2011. The data are drawn from the International Migration Statistics (OECD) and the International Monetary Fund Database (IMF). Our results provide empirical evidence that the growth rates of GDP and unemployment cause migration in Granger’s sense. On the contrary, evidence of reverse causality is not established.
    Keywords: Immigration; Unemployment; Growth
    JEL: E24 O10 J61
    Date: 2012–06–08
  13. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: This paper applies the “spatial correlations” methodology in order to investigate the impact of immigrants on the labor market performance of natives. We use information on 13 local labor markets for the period 1988-2008. The data are drawn from the Greek Labor Force Survey. We address the endogeneity of immigrants’ location choices by using an instrumental variables methodology. Our results provide empirical evidence that immigrants do not displace the indigenous workers. Also, there is evidence that: (i) medium skilled unemployment declines with immigration and (ii) labor force participation rises due to immigration.
    Keywords: immigration; unemployment; participation
    JEL: E24 J61
    Date: 2012–07–08
  14. By: Braun, Sebastian (Kiel Institute for the World Economy); Kvasnicka, Michael (RWI)
    Abstract: Does immigration accelerate sectoral change towards high-productivity sectors? This paper uses the mass displacement of ethnic Germans from Eastern Europe to West Germany after World War II as a natural experiment to study this question. A simple two-sector model of the economy, in which moving costs prevent the marginal product of labor to be equalized across sectors, predicts that immigration boosts output per worker by expanding the high-productivity sector, but decreases output per worker within a sector. Using German district-level data from before and after the war, we find strong empirical support for these predictions.
    Keywords: immigration, sectoral change, output growth, post-war Germany
    JEL: J61 J21 C36 N34
    Date: 2012–06
  15. By: Marko Koethenbuerger (University of Copenhagen and CESifo)
    Abstract: Corporate tax systems generally maintain a sharp distinction between debt and equity, however, the advent of hybrid instruments has transformed the universe offinancial instruments into a debt-equity continuum and tax systems therefore need to draw lines that distinguish the set of debt instruments from the set of equity instruments. When countries draw these lines differently, there is a scope for international tax planning: A multinational firm financing a foreign investment with a hybrid instrument categorized as debt in the host country and equity in the home country combines the benfits of tax deductible interest payments in the host country and tax favored dividend payments in the home country. This paper develops a theoretical model of strategic line drawing between debt and equity in the presence of hybrid instruments. In the absence of international cooperation, lines are generally drawn in a globally suboptimal manner. The inefficiency ciency typically derives from the endeavors of policymakers to draw lines in ways that facilitate hybrid financing by domestic multinational firms and impede hybrid financing by foreign multinational firms with a view to eroding foreign taxation of domestic firms and enforcing domestic taxation of foreign firms.
    Keywords: Migration, Redistribution, Income Taxation, Government Strategy, Endogenous Type of Competition
    JEL: H7 J2 F2
    Date: 2012–01
  16. By: Timo Baas (Department of Economics, University of Essen-Duisburg); Silvia Maja Melzer (Department of Sociology, University of Bielefeld)
    Abstract: Using data for Germany, we analyze the impact of migration and remittances by developing an open-economy general equilibrium model with heterogeneous households. Within the model, the flows of remittances depend on the altruism of households. Households with higher altruism coefficient derive a higher utility from consumption of distant household members. Estimating the interrelation between household characteristic and remittances, we are able to derive altruism coefficients for different types of households. Applying the coefficients to our model, we show that remittances affect the macroeconomy primarily through the real exchange rate channel. Stronger remittances outflows depreciate the real exchange rate and give incentives to reallocate resources from the non-tradable towards tradable goods sectors. In the case of Germany, this translates into a converse dutch disease phenomenon.
    Keywords: EU Eastern enlargement, remittances, international migration, computable equilibrium model
    Date: 2012–07

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