IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v242y2024ics0165176524003161.html
   My bibliography  Save this article

Distributional effects of immigration and imperfect labour markets

Author

Listed:
  • Costas-Fernández, Julián
  • Lodato, Simón

Abstract

In canonical models, the labour share is orthogonal to immigration shocks in the long run, regardless of the impact of immigration on productivity. In contrast, this paper provides evidence that immigration increases labour productivity while reducing the labour share. We produce this evidence using data from Great Britain with a shift-share instrument that exploits European Union expansions and changes in immigration to other high-income countries. Our results are consistent with the predictions from imperfect labour market models, where immigrant and native workers are heterogeneous in skills, and the former have lower labour supply elasticities than the latter. A significant implication of our analysis is that immigration redistributes income from workers to employers.

Suggested Citation

  • Costas-Fernández, Julián & Lodato, Simón, 2024. "Distributional effects of immigration and imperfect labour markets," Economics Letters, Elsevier, vol. 242(C).
  • Handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003161
    DOI: 10.1016/j.econlet.2024.111832
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176524003161
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.econlet.2024.111832?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Card, 1990. "The Impact of the Mariel Boatlift on the Miami Labor Market," ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
    2. George J. Borjas, 2021. "The Economic Benefits from Immigration," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 13, pages 411-430, World Scientific Publishing Co. Pte. Ltd..
    3. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    4. Christian Dustmann & Tommaso Frattini & Ian P. Preston, 2013. "The Effect of Immigration along the Distribution of Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 145-173.
    5. Giovanni Peri, 2016. "The Effect Of Immigration On Productivity: Evidence From U.S. States," World Scientific Book Chapters, in: The Economics of International Migration, chapter 8, pages 265-275, World Scientific Publishing Co. Pte. Ltd..
    6. Ottaviano, Gianmarco I.P. & Peri, Giovanni & Wright, Greg C., 2018. "Immigration, trade and productivity in services: Evidence from U.K. firms," Journal of International Economics, Elsevier, vol. 112(C), pages 88-108.
    7. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    8. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2016. "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.
    9. John Appleton, 2011. "Revised methodology for unit wage costs and unit labour costs: explanation and impact," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 5(10), pages 1-9, October.
    10. Stuhler, Jan & Jaeger, David & Ruist, Joakim, 2018. "Shift-Share Instruments and the Impact of Immigration," CEPR Discussion Papers 12701, C.E.P.R. Discussion Papers.
    11. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 201-234, National Bureau of Economic Research, Inc.
    12. Alan Manning, 2021. "Monopsony in Labor Markets: A Review," ILR Review, Cornell University, ILR School, vol. 74(1), pages 3-26, January.
    13. Ethan Lewis, 2013. "Immigration and Production Technology," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 165-191, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julian Costas-Fernandez & Simon Lodato, 2023. "Distributional effects of immigration and imperfect labour markets," RF Berlin - CReAM Discussion Paper Series 2301, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    2. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    3. Brunello, Giorgio & Lodigiani, Elisabetta & Rocco, Lorenzo, 2020. "Does low-skilled immigration increase profits? Evidence from Italian local labour markets," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    4. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61.
    5. Xie, Bin, 2017. "The Effects of Immigration Quotas on Wages, the Great Black Migration, and Industrial Development," IZA Discussion Papers 11214, Institute of Labor Economics (IZA).
    6. Chletsos Michael & Roupakias Stelios, 2019. "Do Immigrants Compete with Natives in the Greek Labour Market? Evidence from the Skill-Cell Approach before and during the Great Recession," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-30, April.
    7. Escarce, José J. & Rocco, Lorenzo, 2021. "Effect of immigration on depression among older natives in Western Europe," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    8. Edo, Anthony & Rapoport, Hillel, 2019. "Minimum wages and the labor market effects of immigration," Labour Economics, Elsevier, vol. 61(C).
    9. Lee, Jongkwan & Peri, Giovanni & Yasenov, Vasil, 2022. "The labor market effects of Mexican repatriations: Longitudinal evidence from the 1930s," Journal of Public Economics, Elsevier, vol. 205(C).
    10. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr, 2018. "The Effects of Immigration in Developed Countries: Insights from Recent Economic Research," CEPII Policy Brief 2018-22, CEPII research center.
    11. Ana María Tribín-Uribe & Achyuta Adhvaryu & Cesar Anzola-Bravo & Oscar Ávila-Montealegre & Leonardo Bonilla-Mejía & Juan Carlos Castro-Fernández & Luz A. Flórez & Ánderson Grajales-Olarte & Alexander , 2020. "Migración desde Venezuela en Colombia: caracterización del fenómeno y análisis de los efectos macroeconómicos," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 97, pages 1-74, October.
    12. George J. Borjas, 2019. "Immigration and Economic Growth," NBER Working Papers 25836, National Bureau of Economic Research, Inc.
    13. Cem Özgüzel, 2020. "The Cushioning Effect of Immigrant Mobility: Evidence from the Great Recession in Spain," PSE Working Papers halshs-03000365, HAL.
    14. Ortega, Javier & Verdugo, Gregory, 2014. "The impact of immigration on the French labor market: Why so different?," Labour Economics, Elsevier, vol. 29(C), pages 14-27.
    15. Dicarlo, Emanuele, 2022. "How Do Firms Adjust to Negative Labor Supply Shocks? Evidence from Migration Outflows," IZA Discussion Papers 14994, Institute of Labor Economics (IZA).
    16. Hammer, Luisa & Hertweck, Matthias S., 2022. "EU enlargement and (temporary) migration: Effects on labour market outcomes in Germany," Discussion Papers 02/2022, Deutsche Bundesbank.
    17. Alberto Alesina & Marco Tabellini, 2024. "The Political Effects of Immigration: Culture or Economics?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 5-46, March.
    18. Christian Dustmann & Ian P. Preston, 2019. "Free Movement, Open Borders, and the Global Gains from Labor Mobility," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 783-808, August.
    19. Anthony Edo, 2017. "The Impact of Immigration on Wage Dynamics: Evidence from the Algerian Independence War," CESifo Working Paper Series 6595, CESifo.
    20. Giuntella, Osea & Mazzonna, Fabrizio, 2015. "Do immigrants improve the health of natives?," Journal of Health Economics, Elsevier, vol. 43(C), pages 140-153.

    More about this item

    Keywords

    Immigration; Productivity; Labour share; Imperfect labour markets; Factor income distribution;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003161. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.