International Economics Seminar Series: The Labor-Market Effects of Immigrant-Induced Demand Shocks in Norway with Jonathan Vogel, UCLA

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At this week’s international trade seminar, Jonathan Vogel, professor of economics at UCLA, presented “The Labor Supply Curve is Upward-Sloping: The Labor-Market Effects of Immigrant-Induced Demand Shocks.” The paper examines how immigration affects native labor-market outcomes, considering not only the supply of immigrant labor, but also demand generated by immigrant consumption. 

Jonathan and his coauthors study Norway, which experienced an exceptionally large and rapid inflow of immigrants following the 2004 and 2007 EU expansions. During this period, the share of migrants from these new EU countries in the Norwegian workplace increased from 0.4% in 2005 to 4% in 2015. To analyze the effects of EU accession immigration, the authors use individual-level employment records from 2000 to 2018, and a new dataset from Nets Branch Norway that tracks consumer spending for all Norwegian residents. The study finds large, positive, and persistent effects on incomes for natives employed in sectors more exposed to immigrant-driven demand (relative to others); these effects are particularly strong in less tradable sectors. The estimated annual income increase for these workers was approximately 1.61% of the average 2003 real earnings. The supply-side effect showed no significant impact overall, though non-college-educated workers experienced slight income declines, while college-educated workers saw slight positive effects.