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How Do Very Open Economies Absorb Large Immigration Flows? Recent Evidence from Spanish Regions

Authors
Disciplines
  • Economics
  • Education

Abstract

In recent years, Spain has received unprecedented immigration flows. Between 2001 and 2006 the fraction of the population born abroad more than doubled, increasing from 4.8% to 10.8%. For Spanish provinces with above-median inflows (relative to population), immigration increased the high school dropout population by 24%, while only increasing the number of college graduates by 11%. We study the different channels by which regional labor markets have absorbed the large increase in the relative supply of low educated (foreign-born) workers. We identify the exogenous supply shock using historical immigrant settlement patterns by country of origin. Using data from the Labor Force Survey and the decennial Census, we find a large expansion of employment in high immigration regions. Specifically, most industries in high-immigration regions experienced a large increase in the share of low-education employment. We do not find an effect on regions’ sectoral specialization. Overall, and perhaps surprisingly, Spanish regions have absorbed immigration flows in the same fashion as US local economies.

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