Immigration and Labour Productivity

• Thesis title in Czech: Dopady imigrace na produktivitu práce
• Thesis title in English: Immigration and Labour Productivity
• Academic year of topic announcement: 2020/2021
• Thesis type: diploma thesis
• Thesis language: angličtina
• Department: Institute of Economic Studies (23-IES)
• Supervisor: PhDr. Jaromír Baxa, Ph.D.
• Author: hidden - assigned by the advisor
• Date of registration: 30.06.2021
• Date of assignment: 30.06.2021
• Date and time of defence: 01.02.2023 09:00
• Venue of defence: Opletalova - Opletalova 26, O109, AULA Michala Mejstříka č. 109
• Date of electronic submission: 06.01.2023
• Date of proceeded defence: 01.02.2023
• Opponents: Mgr. Barbara Pertold-Gebicka, M.A., Ph.D.

Guidelines

Motivation:
With globalisation and record international migration flows growing for several decades, studying the economic impact from the perspective of receiving countries seems critical in order to ensure efficiency in designing appropriate public policies that would contribute to a sustainable growth path. Despite the Covid-19 pandemic causing a slowdown in global migration growth, the increasing trend is likely to continue if the market challenges of population ageing or declining labour force participation rates in developed countries retain the interest of policy makers. Within this context, I would like to focus on the impact of immigration on labour productivity in the European Union. While some of the recent research suggests there is a positive effect on economic development (IMF, 2016; d’Albis et al., 2016; Goldin et al., 2018), this thesis would be concerned specifically with labour productivity, which has been stagnating in some advanced economies such as Germany. If a link between immigration and productivity of labour is found, the thesis should also strive for explaining whether there are some country specificities and why the effect size might differ across the sample.

Hypotheses:
1. Hypothesis #1: Immigration and labour productivity are related.
2. Hypothesis #2: Immigration has a statistically significant effect on labour productivity in advanced economies.
3. Hypothesis #3: The effect size of immigration on labour productivity differs across countries within the sample.

References

BORJAS, George J., 2018. Lessons from Immigration Economics. The Independent Review. 2018. Vol. 2, No.3, pp. 329-340. Available from: https://www.jstor.org/stable/26314769.

D’ALBIS, Hippolyte, BOUBTANE, Ekrame and COULIBALY, Dramane, 2016. Immigration Policy and Macroeconomic Performance in France. Annals of Economics and Statistics. June 2016. No. 121/122, p. 279–308. DOI 10.15609/annaeconstat2009.121-122.279.

DUSTMANN, Christian and FRATTINI, Tommaso, 2008. The labour market impact of immigration. Oxford Review of Economic Policy. Vol. 24, No. 3, LABOUR MIGRATION IN EUROPE, pp. 477-494.

GOLDIN, Ian, ANDREW, Pitt, NABARRO, Benjamin and BOYLE, Kathleen, 2018. Migration and the Economy: Economic Realities, Social Impacts and Political Choices. Citi-Oxford Martin School Reports. University of Oxford. Citi GPS: Global Perspectives & Solutions. Available from: https://www.oxfordmartin.ox.ac.uk/publications/migration-and-the-economy-economic- realities-social-impacts-and-political-choices/

JAUMOTTE, Florence, KOLOSKOVA, Ksenia and SAXENA, Sweta Chaman, 2016. Impact of Migration on Income Levels in Advance Economies. International Monetary Fund. Spillover Notes, 16. ISBN 978-1-4755-4591-3.

KANGASNIEMI, Mari, MAS, Matilde, ROBINSON, Catherine and SERRANO, Lorenzo, 2012. The economic impact of migration: productivity analysis for Spain and the UK. Journal of Productivity Analysis. December 2012. Vol. 38, No. 3, pp. 333-343. Available from: https://www.jstor.org/stable/43549956.

ORTEGA, Francesc, PERI, Giovanni, 2014. Openness and income: The roles of trade and migration. Journal of International Economics, 2014. Vol. 92, No. 2, pp. 231-251. DOI: 10.1016/j.jinteco.2013.11.008.

Preliminary scope of work

Methodology:
To see the potential relation between immigration and labour productivity, both variables will first have to be defined. Immigration would represent the total number of foreign residents in the respective country relative to its adult population, while labour productivity could be decomposed as the capital-to-labour ratio, average human capital per worker, and total factor productivity. These variables could then be plotted and inspected using a correlation coefficient.
To check empirically the effect of immigration on labour productivity, the model would have to address the problem of potential reversed causality bias stemming from the endogenous character of both variables. This problem could likely be addressed by constructing a panel VAR model, which is rather atheoretical and allows for endogenous interactions among all variables. To get significant results, enough data would have to be used. In this sense, it is expected to use yearly series from Eurostat from 1990-2019.
In the next phase, the model would be used to check for potential heterogeneity in the responses of productivity to the innovations in immigration. If some significant differences are found, these could be further examined by exploring the migrant structures in the respective countries, which could help explain the cross-country differences.

Expected Contribution:
There has been some research on the macroeconomic impact of immigration to advanced economies already (Kangasniemi et al., 2012; Ortega and Peri, 2014; Jaumotte et al., 2017), on the other hand, labour productivity as such is rather rare to be examined. Moreover, explanation of the potential heterogeneity in different countries is still missing to a large extent. If successful, the thesis could thus present a potential reference for designing more efficient immigration policies in specific countries. Also, while most studies deal with a more heterogenous set of developed countries such as the OECD, this thesis would emphasize specifically the case of the European Union.