Migration and Unemployment Duration: The Case of the OECD Countries
This paper examines whether or not immigration has a positive influence on the duration of unemployment, in a macroeconomic perspective. We analyse also whether the degree of labor market integration can influence migration. The integration of immigrants into the labor market is a recurrence theme in the work on the economic consequences of immigration. However, to our knowledge, no researchers have studied the impact of immigration on unemployment duration, and vice versa. With two methodology of research (panel estimations (OLS and 2SLS) and panel cointegration techniques), we show that migration seems to influence positively the short-term unemployment and negatively long-term unemployment, for 14 OECD destination countries. In addition, immigration seems to be conditioned by the structural and institutional characteristics of the labour market.
[1] Aleksynska, M. and Schindler, M. (2011) Labor Market Institutions in
Advanced and Developing Countries: A New Panel Database, IMF
Working Paper 11/154.
[2] Altonji, J. G. and Card, D. (1991) The effects of immigration on the
labor market outcomes of less-skilled natives, in Immigration, Trade,
and the Labor Market (Eds) J. M. Abowd and R. B. Freeman, Chicago
University Press, Chicago, pp. 210-34.
[3] Angrist, J. and Kugler, A. (2003) Protective or counter-productive?
Labour market institutions and the effect of immigration on EU natives,
The Economic Journal, 113, 302-331.
[4] Baltagi, B. H. (2005) A Hausman test based on the difference between
fixed effects two-stage least squares and error components two-stage
least squares - Solution, Econometric Theory, 21(2), 483-484.
[5] Blanchard, O., Commander, S. and Coricelli, F. (1995) Unemployment
and restructuring in Eastern Europe and Russia, in Unemployment,
Restruturing and the Labour Market in Eastern Europe and Russia, The
World Bank, Washington DC.
[6] Borjas, G. J. (1994) The Economics of Immigration, Journal of
Economic Literature, 32, 1667-1717.
[7] Chiswick, B. R. (1978) The Effect of Americanization on the Earnings
of Foreign-born Men, Journal of Political Economy, 86(5), 897-921.
[8] Chiswick, B. R. (1980) An Analysis of the Economic Progress and
Impact of Immigrants, Final Report to the U.S. Department of Labor,
Washington: U.S. Department of Labor.
[9] Engle, R. F. and Granger, C. W. J. (1987) Co-integration and error
correction: representation, estimation and testing, Econometrica, 55,
251-76.
[10] European Commission (2006) Efficiency and Equity in the European
Education and Training Systems, European Commission, Brussels.
[11] Fondazione Rodolfo DeBenedetti (2007) Social reform database,
http://www.frdb.org/ documentazione/scheda.php
[12] Fromentin, V. (2011) The Relationship between Immigration and
Labour Market: The Cases of Germany, France and the United
Kingdom, The Empirical Economics Letters, 10(11).
[13] Gross, D. M. (2002) Three million foreigners, three million
unemployed? Immigration flows and the labour market in France,
Applied Economics Letters, 34, 1969-83.
[14] Gross, D. M. and Schmitt, N. (2012) Low- and high-skill migration
flows: free mobility versus other determinants, Applied Economics,
44(1), 1-20.
[15] Gutierrez, L. (2003) On the power of panel cointegration tests: A Monte
Carlo comparison, Economics Letters, 80, 105-111.
[16] Hatton, T. J. and Williamson, J. G. (2002) What Fundamentals Drive
World Migration? NBER Working Paper 9159, National Bureau of
Economic Research, Cambridge.
[17] Jean, S. and Jiménez, M. (2011) The unemployment impact of
immigration in OECD countries, European Journal of Political
Economy, 27(2), 241-256.
[18] Kao, C. and Chiang, M. H. (2000) On the estimation and inference of a
cointegrated regression in panel data, Advances in Econometrics, 15,
179-222.
[19] Kao, C., 1999, Spurious regression and residual-based tests for
cointegration in panel data, Journal of Econometrics, 90, pp. 1-44.
[20] Kelejian, H.H. and Prucha, I.R. (1998) A generalized spatial two-stage
least squares procedure for estimating a spatial autoregressive model
with autoregressive disturbance, Journal of Real Estate Finance and
Economics, 17, 99-121.
[21] Larcker, D. and Rusticus, T. (2010) On the use of instrumental variables
in accounting research, Journal of Accounting and Economics, 49(3),
186-205.
[22] Layard, R., and S. Nickell (1999) Labor Market Institutions and
Economic Performance, in Handbook of Labor Economics, vol. 3, ed. by
O. Ashenfelter and D. Card, North Holland.
[23] Levin, A., Lin, C. F. and Chu, C. S. J. (2002) Unit root tests in panel
data: asymptotic and finite sample properties, Journal of Econometrics,
108, 1-24.
[24] Longhi, S., Nijkamp, P. and Poot, J. (2010) Joint impacts of immigration
on wages and employment: review and meta-analysis, Journal of
Geographical Systems, 12(4), 355-387.
[25] Mark, N. C. and Sul, D. (2003) Cointegration vector estimation by panel
DOLS and long-run money demand, Oxford Bulletin of Economics and
Statistics, Department of Economics, University of Oxford, vol. 65(5),
655-680.
[26] Mayda, A. M. (2010) International migration: A panel data analysis of
the determinants of bilateral flows, Journal of Population Economics,
Springer, 23(4), 1249-1274.
[27] Murray, M. P. (2006) Avoiding Invalid Instruments and Coping with
Weak Instruments, The Journal of Economic Perspectives, 20(4), 111-
132.
[28] Okkerse, L. (2008) How to measure labour market effects of
immigration: A review, Journal of Economic Surveys, 22(1), 1-30.
[29] Örsal, K. D. D. (2008) Comparison of Panel Cointegration Tests,
Economics Bulletin, 3: 1-20.
[30] Ortega, F. and Peri, G. (2009) The Causes and Effects of International
Migrations: Evidence of OECD Countries 1980-2005, NBER Working
Paper No. 14833.
[31] Pedersen, P. J., Pytlikova, M. and Smith, N. (2008) Selection or
Network Effects? Migration Flows into 27 OECD Countries, 1990-2000,
European Economic Review, 52(7), 1160-1186.
[32] Pedroni, P. (1999) Critical values for cointegration tests in
heterogeneous panels with multiple regressors, Oxford Bulletin of
Economics and Statistics, 61, 631-52.
[33] Pedroni, P. (2004) Panel cointegration: asymptotic and finite sample
properties of pooled time series tests with an application to the PPP
hypothesis, Econometric Theory, 20(3), 597-625.
[34] Pissarides, C. A. and Vallanti, G. (2007) The Impact of TFP Growth on
Steady-State Unemployment, International Economic Review, 48, 607-
640.
[35] Simon, J. (1989) The Economic Consequences of Immigration, Basil
Blackwell, New York and The Cato Institute, Washington.
[36] Stock, J. H. and Watson, M. W. (1993) A simple estimator of
cointegrating vectors in higher order integrated systems, Econometrica,
61, 783-820.
[37] Stock, J. H., and Yogo, M. (2004) Testing for Weak Instrument in
Linear IV Regression, NBER working paper 0284.
[38] Wagner, M. and Hlouskova, J. (2007) The Performance of Panel
Cointegration Methods: Results from a Large Scale Simulation Study,
IHS Economics Series, No. 210.
[1] Aleksynska, M. and Schindler, M. (2011) Labor Market Institutions in
Advanced and Developing Countries: A New Panel Database, IMF
Working Paper 11/154.
[2] Altonji, J. G. and Card, D. (1991) The effects of immigration on the
labor market outcomes of less-skilled natives, in Immigration, Trade,
and the Labor Market (Eds) J. M. Abowd and R. B. Freeman, Chicago
University Press, Chicago, pp. 210-34.
[3] Angrist, J. and Kugler, A. (2003) Protective or counter-productive?
Labour market institutions and the effect of immigration on EU natives,
The Economic Journal, 113, 302-331.
[4] Baltagi, B. H. (2005) A Hausman test based on the difference between
fixed effects two-stage least squares and error components two-stage
least squares - Solution, Econometric Theory, 21(2), 483-484.
[5] Blanchard, O., Commander, S. and Coricelli, F. (1995) Unemployment
and restructuring in Eastern Europe and Russia, in Unemployment,
Restruturing and the Labour Market in Eastern Europe and Russia, The
World Bank, Washington DC.
[6] Borjas, G. J. (1994) The Economics of Immigration, Journal of
Economic Literature, 32, 1667-1717.
[7] Chiswick, B. R. (1978) The Effect of Americanization on the Earnings
of Foreign-born Men, Journal of Political Economy, 86(5), 897-921.
[8] Chiswick, B. R. (1980) An Analysis of the Economic Progress and
Impact of Immigrants, Final Report to the U.S. Department of Labor,
Washington: U.S. Department of Labor.
[9] Engle, R. F. and Granger, C. W. J. (1987) Co-integration and error
correction: representation, estimation and testing, Econometrica, 55,
251-76.
[10] European Commission (2006) Efficiency and Equity in the European
Education and Training Systems, European Commission, Brussels.
[11] Fondazione Rodolfo DeBenedetti (2007) Social reform database,
http://www.frdb.org/ documentazione/scheda.php
[12] Fromentin, V. (2011) The Relationship between Immigration and
Labour Market: The Cases of Germany, France and the United
Kingdom, The Empirical Economics Letters, 10(11).
[13] Gross, D. M. (2002) Three million foreigners, three million
unemployed? Immigration flows and the labour market in France,
Applied Economics Letters, 34, 1969-83.
[14] Gross, D. M. and Schmitt, N. (2012) Low- and high-skill migration
flows: free mobility versus other determinants, Applied Economics,
44(1), 1-20.
[15] Gutierrez, L. (2003) On the power of panel cointegration tests: A Monte
Carlo comparison, Economics Letters, 80, 105-111.
[16] Hatton, T. J. and Williamson, J. G. (2002) What Fundamentals Drive
World Migration? NBER Working Paper 9159, National Bureau of
Economic Research, Cambridge.
[17] Jean, S. and Jiménez, M. (2011) The unemployment impact of
immigration in OECD countries, European Journal of Political
Economy, 27(2), 241-256.
[18] Kao, C. and Chiang, M. H. (2000) On the estimation and inference of a
cointegrated regression in panel data, Advances in Econometrics, 15,
179-222.
[19] Kao, C., 1999, Spurious regression and residual-based tests for
cointegration in panel data, Journal of Econometrics, 90, pp. 1-44.
[20] Kelejian, H.H. and Prucha, I.R. (1998) A generalized spatial two-stage
least squares procedure for estimating a spatial autoregressive model
with autoregressive disturbance, Journal of Real Estate Finance and
Economics, 17, 99-121.
[21] Larcker, D. and Rusticus, T. (2010) On the use of instrumental variables
in accounting research, Journal of Accounting and Economics, 49(3),
186-205.
[22] Layard, R., and S. Nickell (1999) Labor Market Institutions and
Economic Performance, in Handbook of Labor Economics, vol. 3, ed. by
O. Ashenfelter and D. Card, North Holland.
[23] Levin, A., Lin, C. F. and Chu, C. S. J. (2002) Unit root tests in panel
data: asymptotic and finite sample properties, Journal of Econometrics,
108, 1-24.
[24] Longhi, S., Nijkamp, P. and Poot, J. (2010) Joint impacts of immigration
on wages and employment: review and meta-analysis, Journal of
Geographical Systems, 12(4), 355-387.
[25] Mark, N. C. and Sul, D. (2003) Cointegration vector estimation by panel
DOLS and long-run money demand, Oxford Bulletin of Economics and
Statistics, Department of Economics, University of Oxford, vol. 65(5),
655-680.
[26] Mayda, A. M. (2010) International migration: A panel data analysis of
the determinants of bilateral flows, Journal of Population Economics,
Springer, 23(4), 1249-1274.
[27] Murray, M. P. (2006) Avoiding Invalid Instruments and Coping with
Weak Instruments, The Journal of Economic Perspectives, 20(4), 111-
132.
[28] Okkerse, L. (2008) How to measure labour market effects of
immigration: A review, Journal of Economic Surveys, 22(1), 1-30.
[29] Örsal, K. D. D. (2008) Comparison of Panel Cointegration Tests,
Economics Bulletin, 3: 1-20.
[30] Ortega, F. and Peri, G. (2009) The Causes and Effects of International
Migrations: Evidence of OECD Countries 1980-2005, NBER Working
Paper No. 14833.
[31] Pedersen, P. J., Pytlikova, M. and Smith, N. (2008) Selection or
Network Effects? Migration Flows into 27 OECD Countries, 1990-2000,
European Economic Review, 52(7), 1160-1186.
[32] Pedroni, P. (1999) Critical values for cointegration tests in
heterogeneous panels with multiple regressors, Oxford Bulletin of
Economics and Statistics, 61, 631-52.
[33] Pedroni, P. (2004) Panel cointegration: asymptotic and finite sample
properties of pooled time series tests with an application to the PPP
hypothesis, Econometric Theory, 20(3), 597-625.
[34] Pissarides, C. A. and Vallanti, G. (2007) The Impact of TFP Growth on
Steady-State Unemployment, International Economic Review, 48, 607-
640.
[35] Simon, J. (1989) The Economic Consequences of Immigration, Basil
Blackwell, New York and The Cato Institute, Washington.
[36] Stock, J. H. and Watson, M. W. (1993) A simple estimator of
cointegrating vectors in higher order integrated systems, Econometrica,
61, 783-820.
[37] Stock, J. H., and Yogo, M. (2004) Testing for Weak Instrument in
Linear IV Regression, NBER working paper 0284.
[38] Wagner, M. and Hlouskova, J. (2007) The Performance of Panel
Cointegration Methods: Results from a Large Scale Simulation Study,
IHS Economics Series, No. 210.
@article{"International Journal of Business, Human and Social Sciences:55023", author = "Vincent Fromentin", title = "Migration and Unemployment Duration: The Case of the OECD Countries", abstract = "This paper examines whether or not immigration has a positive influence on the duration of unemployment, in a macroeconomic perspective. We analyse also whether the degree of labor market integration can influence migration. The integration of immigrants into the labor market is a recurrence theme in the work on the economic consequences of immigration. However, to our knowledge, no researchers have studied the impact of immigration on unemployment duration, and vice versa. With two methodology of research (panel estimations (OLS and 2SLS) and panel cointegration techniques), we show that migration seems to influence positively the short-term unemployment and negatively long-term unemployment, for 14 OECD destination countries. In addition, immigration seems to be conditioned by the structural and institutional characteristics of the labour market.
", keywords = "international migration, unemployment duration,
OECD countries, panel data", volume = "6", number = "4", pages = "491-7", }
