Does Immigration Grease the Wheels of the Labor Market?

MOST STUDIES OF the economic impact of immigration are motivated by the desire to understand how immigrants affect various dimensions of eco-nomic status in the population of the host country. This motivation explains the persistent interest in determining whether immigrants “take jobs away ” from native workers, as well as the attention paid to measur-ing the fiscal impact that immigration inevitably has on host countries that offer generous welfare benefits.1 For the most part, the existing literature overlooks the factor that places immigration issues and the study of labor mobility in general at the core of modern labor economics. The analysis of labor flows, whether within or across countries, is a central ingredient in any discussion of labor market equilibrium. Presumably, workers respond to regional differences in eco-nomic opportunities by voting with their feet, and these labor flows improve labor market efficiency. In this paper I emphasize this different perspective to analyzing the eco-nomic impact of immigration: immigration as grease on the wheels of th