PUBLISHED VERSION Benedikt Heid, Mario Larch Migration, trade and unemployment Economics : the Open-Access, Open-Assessment e-Journal, 2012; 6(2012-4):1-41 © Author(s) 2012. Licensed under a Creative Commons License - Attribution-NonCommercial 2.0 Germany Originally published at: http://doi.org/10.5018/economics-ejournal.ja.2012-4 PERMISSIONS https://creativecommons.org/licenses/by-nc/2.0/de/deed.en 7 November 2017 http://hdl.handle.net/2440/107551 Vol. 6, 2012-4 | March 7, 2012 | http://dx.doi.org/10.5018/economics-ejournal.ja.2012-4 Migration, Trade and Unemployment Benedikt Heid University of Bayreuth and ifo Institute Munich Mario Larch University of Bayreuth, ifo Institute Munich, CESifo and GEP at University of Nottingham Abstract A source of anxiety of policy makers and the public in general is the detrimental impact of trade and immigration on unemployment. The transitory restrictions for worker migration after the EU enlargements of 2004 and 2007 exemplify the supposed negative effect of immigration on labor markets. This paper aims to identify the effects of immigration alongside trade on unemployment controlling for the high correlation between immigration and goods flows in order to prevent an omitted variable bias. The authors use data from 24 OECD countries over the period from 1997 to 2007 and employ instrumental variables fixed effects and dynamic panel estimators in order to account for unobserved heterogeneity as well as the potential endogeneity of migration flows and the high persistence of unemployment. We find no significant effect of immigration on unemployment on average. Special Issue Responding to the Labour Market Challenges of Globalisation JEL F22, F16, C23, C26, F15 Keywords Migration; unemployment; international trade; fixed effects instrumental variable panel estimators; dynamic panel estimators Correspondence Benedikt Heid, University of Bayreuth and ifo Institute Munich, Universitaetsstrasse 30, 95447 Bayreuth, Germany, e-mail:
[email protected] Citation Benedikt Heid and Mario Larch (2012).