BPEA | 2001 No. 1

Does Immigration Grease the Wheels of the Labor Market

2001, No. 1

MOST STUDIES OF the economic impact of immigration are motivated by
the desire to understand how immigrants affect various dimensions of economic
status in the population of the host country. This motivation
explains the persistent interest in determining whether immigrants “take
jobs away” from native workers, as well as the attention paid to measuring
the fiscal impact that immigration inevitably has on host countries
that offer generous welfare benefits.1
For the most part, the existing literature overlooks the factor that places
immigration issues and the study of labor mobility in general at the core of
modern labor economics. The analysis of labor flows, whether within or
across countries, is a central ingredient in any discussion of labor market
equilibrium. Presumably, workers respond to regional differences in economic
opportunities by voting with their feet, and these labor flows
improve labor market efficiency.