Relationship between migration and unemployment: Panel Data Analysis for Selected OECD Countries

Abstract

In this study, impacts of migration on labor market are studied. As changes experienced in the labor market of migration receiving and sending countries impact unemployment figures directly, the study is based on the determining the relationship between migration and unemployment. Literature investigating the relationship between migration and unemployment mainly focuses on the impacts of migration on labor markets. There is no generally accepted opinion on the direction and degree of impact of internal migration and international migration on unemployment. While some of the studies argue that migration has negative impact on unemployment, some argue just the opposite and even some express that there is no significant relationship between migration and unemployment. We investigate this direction and size of the relationship between migration and unemployment in 23 selected OECD countries. In panel data model we found that migration and economic growth have a negative and statistically significant effect on unemployment whereas; the consumer price index and average wages have a positive but statistically meaningless effect. It is observed that results obtained in this study are in parallel with the results of studies in the literature conducted by Kulkolkarn and Potipiti (2007), Heid and Larch (2011), Fromentin (2013) and Latif (2015).