Revisiting the Effect of Immigration on Native Employment in the EU

Abstract

This paper uses and extends the empirical strategy developed by Angrist and Kugler (2003) in order to test the effect of external immigration on native employment rates in the European Union (EU) in light of the booming migration flows of the 2000s. My findings discredit the authors’ main assertions that immigration causes considerable job displacement among natives, the extent of which is significantly related to protective labour market institutions in the host country. The divergence of results stems partly from the continuous transformation of the immigration process and its employment consequences for natives, partly from the superior identification strategies employed to account for heterogeneity across countries and effective labour market institutions. Immigration is found to be driven principally by labour demand factors and appears at least as much an economic blessing to entertain as something to be afraid of and protected from.