The long run impact of immigration on labor market in an advanced economy: Evidence from US data

Abstract

Purpose

The purpose of this paper is to examine the dynamic relationship among immigration rate, GDP per capita, and and real wage rates in the USA.

Design/methodology/approach

The paper implements the Johansen-Juselius (1990, 1992) cointegration technique to test for a long-run relationship; and for short-run dynamics the authors apply Granger causality tests under the vector error-correction model.

Findings

The results show that the long-run causality runs from GDP per capita to immigration, not vice versa. Growing economy attracts immigrants. The authors also find that immigration flow depresses average weekly earnings of the natives in the long-run.

Originality/value

The authors are not aware of any study on the USA addressing the impact of immigrants on labor market using a tripartite approach by explicitly incorporating economic growth. It is therefore important to pursue a theoretically justified empirical model in search of a relation to resolve on apparent immigration debate.

Citation

Islam, F. and Khan, S. (2015), "The long run impact of immigration on labor market in an advanced economy: Evidence from US data", International Journal of Social Economics, Vol. 42 No. 4, pp. 356-367. https://doi.org/10.1108/IJSE-12-2013-0291