Journal Article
No. 2012-4 | March 07, 2012
Benedikt Heid and Mario Larch
Migration, Trade and Unemployment
(Published in Responding to the Labour Market Challenges of Globalisation)


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.

JEL Classification:

C23, C26, F15, F16, F22


Cite As

Benedikt Heid and Mario Larch (2012). Migration, Trade and Unemployment. Economics: The Open-Access, Open-Assessment E-Journal, 6 (2012-4): 1–40.

Comments and Questions

Analítika Revista de Análisis Estadístico - Migration, Trade and Unemployment
October 25, 2012 - 17:30 | Author's CV, Homepage
In Ecuador, has published a paper of the effects of immigration, called "Evolution of the immigrant population of Ecuador" on Journal of Statistical Analysis, Analitika This paper pioneers in estimating and forecasting the stock and flow of immigrants that could arrive in Ecuador in the period 2011 - 2016. We analyze the influence of the GDP per capita and the unemployment rate as factors for human migration.Multiple linear regression models (OLS) are made using information of foreigners entry into Ecuador in the period 2002 - 2010, the GDP per capita and the unemployment rate in the countries of origin and in Ecuador as well. The data are taken from the Instituto Nacional de Estadística y Censos (INEC) and the International Monetary Fund (IMF). Download file