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Migration and labour markets in OECD countries: a panel cointegration approach

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Abstract:

This article examines the interaction between immigration and the host labour market of 14 Organization for Economic Co-operation and Development (OECD) countries using nonstationary panel data methodology. We estimate a trivariate Vector Error Correction Model (VECM) and derive causality tests to simultaneously assess the long- and short-term macroeconomic impact of newcomers on wages and unemployment levels in the host country. The results suggest that an increase of migrants is likely to increase wages in the destination countries in the short run but to increase them in the long run. There is no evidence of adverse effects on unemployment due to immigration in short and long-term except for Anglo-Saxon countries in the short term. Our findings also show that immigration is conditioned by levels of unemployment and wages especially in Anglo-Saxon countries.

Keywords: C1; F2; J6; causality; cointegration; immigration; panel; unemployment

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2012.661400

Affiliations: 1: Faculté de Sciences Economiques et de Gestion,Université Paris 12, Université Paris-Est Créteil (UPEC), ERUDITE 61 Av. du Gal de Gaulle94010 Creteil, France 2: CEREFIGE,Université Nancy 2, Pôle Lorrain Gestion 13, rue Maréchal Ney, 54000 Nancy, France

Publication date: June 1, 2013

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