Immigration and Unemployment in Europe: Does the core-periphery dualism matter?

In this paper, we assess the relation between immigration and unemployment for a sample of 15 EU countries between 1997 and 2016. We estimate separate effects for Northern and Southern Countries based on the differences between the two groups in terms of skill intensity and flexibility of labour market adjustments. We use a panel Error Correction Model to assess the direction and persistence of the impact of immigration on domestic unemployment in the short and in the long run. In the long run, immigration is found to reduce unemployment in all peripheral-countries. In core countries, on average there is no long-run impact of immigration on unemployment due to a substantial heterogeneity, but country specific estimates provide evidence that immigration might have reduced unemployment in France, Germany and the UK. As for short-run dynamics, for the EU15 as a whole we find a confirmation of the result that immigration reduces unemployment, while the evidence of a core-periphery dualism is less pronounced.

P. Esposito, S. Collignon, S. Scicchitano: Immigration And Unemployment In Europe – Does The Core-Periphery Dualism Matter? Working paper 3/2019, School of European Political Economy LUISS, March 2019.

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