Immigration Policy and the Search for Skilled Workers Summary of a Workshop (2015) / Chapter Skim
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6 The Effects of Immigration on Innovation and Labor Markets
6 The Effects of Immigration on Innovation and Labor Markets
Pages 79-96
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From page 79... ...
An open discussion, moderated by planning committee member Ellen Dulberger, then followed. HIGH-SKILLED MIGRATION AND IMPERFECT LABOR MARKETS Herbert Brücker's presentation focused on European labor markets.
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model, has low employment protection, moderate union density and low collective bargaining coverage, relatively low unemployment benefits, low product market regulation, and low trade exposure. In each of these three countries, collective wage bargaining in one way or another affects the way society overall and wages in particular respond to unemployment and labor supply shocks.
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One explanation for the result in Denmark is that there is a large share of public sector employment filled by high-skilled workers, particularly women in the education sector. Another explanation may be that labor union density is higher in Denmark for high-skill individuals compared to other groups in the labor market, which could increase pay.
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In Germany, native workers benefit more from middle-skilled immigration than from high-skilled migration, while high-skilled migration mitigates the adverse impact on migrant workers. He explained the latter by explaining that in Germany, the average qualification level of the native workforce is higher than it is in the migrant workforce, so native German workers compete more with high-skilled migrants.
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Brücker pointed out that the total gains from immigration can be enhanced and inequality reduced by developing labor market policies that attempt to increase wage flexibility, through immigration policies that target immigrants in flexible labor market segments, and by integrating policies that attempt to increase the elasticity of substitution between native and foreign workers. Overall, high-skilled immigration increases the total welfare of a country if wage flexibility is high in the high-skilled segment.
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"This was an overwhelmingly highly skilled group of migrants," said Paserman, who added that Israel's gross domestic product has grown at an average of 4.6 percent per year since the 1990s, compared to 2 percent per year in the United States. In contrast to most countries, Israel has an almost completely open immigration policy.
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FIGURE 6-1 Immigration to Israel in absolute numbers, 1948-2012. SOURCE: Israel Central Bureau of Statistics.
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Paserman noted that natives with college degrees are overwhelmingly employed as scientists or in other white collar jobs, whereas the 1990s immigrants mainly worked in blue collar jobs. The immigration wave of the 1990s was associated with a short-term drop in the wages of native workers in occupations with high concentrations of immigrants: a 10 percent increase in immigrant share was associated with a 3 3 Weiss, Y., R
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By 1997, that gap had closed, with the share of immigrants working as scientists within the manufacturing sector mirroring their proportion of the total population, and the percentage of recent immigrants employed as production workers falling to 81 percent. Despite the macroeconomic impact of immigration on productivity, there was no evidence that immigrant concentration is correlated with productivity at the individual firm level.
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Immigrants are not always more driven, ambitious, and successful than the native population. As the number of immigrants increase, the probability of getting the most talented individuals decreases.
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However, census data show that the share of individuals with ethnic surnames that are first generation immigrants is large. In addition, using data from a variety of sources, including surveys of Silicon Valley firms, fast-growing companies, and recent initial public offerings, Kerr estimates that immigrants have accounted for about 25 percent of the innovation activity in the U.S.
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According to Kerr, if the quality of the individuals is the same and if they make the same investments in education, the overall impact will depend on quantity and whether the number of immigrants entering a particular STEM field crowd out natives. An increase in the number of immigrants entering a given field may cause the labor supply curve to shift out and lead to lower salaries.
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native workers. One question is how well local labor markets model the decisions that firms make with regard to high-skilled migrants given that individuals can move within a country as well as between countries.
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Brücker should also consider building potential productivity effects from immigration into his models. Kerr's presentation pointed out that institutional differences can significantly affect immigration's impact on labor markets.
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"It may also spread effects on wages and on labor markets in a way that is relatively similar to the impacts we have at the aggregate level if the capital stock adjusts," said Brücker. "If the capital stock adjusts, a large part of these effects at the aggregate level disappears, and the same is true for trade." What he and his colleagues have observed in Germany, and which he believes holds true for many other countries with a strong export position, is that being an exporter attracts migrants through what might be thought of as an advertising effect.
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Another audience member then asked Paserman if he could comment on how Israel handled the huge influx of Soviet immigrants and if Israel is seen as a natural destination for displaced people trying to find a safe haven in the world. Paserman said that the reaction of Israelis to the influx of Russian immigrants was to see it as almost a miracle that so many Jews would be free to leave the Soviet Union and come to Israel.
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The Effects of Immigration on Innovation and Labor Markets 95 lines of how Americans view illegal immigrants from Mexico or how Europeans react to workers from North Africa. He added that it is not a matter of Israeli policy to admit refugees from Syria or Iraq.
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