Essays on the Political Economy of Immigration

Abstract

The thesis presents three essays dealing with political, social and economic aspects of international migration. In the second chapter (coauthored work with Prof. Lewis Davis, Union College, NY), we revisit the well-established salient relationship between rising immigrant population shares (IPS) and the success of far-right parties in the European countries. In particular, special attention is given to better understanding the cross-country variations in this relationship by considering the country’s macroeconomic and macrocultural characteristics. Our separate consideration of citizens’ economic and cultural concerns over immigration is another contribution to the literature as different concerns may suggest different types of policy interventions in mitigating the well-documented impact of immigration. The results suggest that European citizens’ economic and cultural opposition to immigration are positively associated with the country’s IPS. Additionally, the findings indicate that economic concerns over immigration are more sensitive to the IPS in countries with 1) higher unemployment rates and 2) lower levels of per capita income. The cultural concerns over immigration, however, depend on neither the country’s historical religious diversity nor its collectivistic national culture. Chapters three and four focus on the determinants of immigrants’ socio-economic assimilation in the host environment. As Europe was subjected to a number of Islamist terror events since the dawn of the 21st century, assimilation of Islamic immigrants living in the West has come to the forefront of policy discussions. In the third chapter, I exploit the episode of sudden news revelations in 2011 of unprovoked crimes committed by a previously unknown extreme rightwing group National Socialist Underground (NSU) against Turkish immigrants in Germany. I study the impact of these news revelations on targeted minority’s social assimilation outcomes. Using the German Socio-economic Panel (SOEP) data, the study offers the first evidence that the 2011 news revelations of NSU crimes increased fears of future xenophobic hostility among the Turkish immigrants. The results further show that the revelations significantly reinforced a feeling of estrangement among Turkish immigrants, who were now less likely to self-identify as Germans and more likely to see themselves as foreigners; they, therefore, tended to bond more strongly with the ethos of their country of origin. The results also demonstrate that Turkish immigrants reported a substantial decrease in their health satisfaction and subjective wellbeing. In conclusion, the findings suggest that the fears of victimhood induced by the NSU revelations have affected social assimilation and the wellbeing of Turkish immigrants living in Germany. In the fourth chapter (coauthored work with Yue Huang, OVG Magdeburg), we investigate another novel and contemporaneously relevant determinant of immigrants’ socio-economic assimilation in the host society, i.e. new immigration flows. In particular, we present first causal evidence of the impact of the inflows of Middle-Eastern refugees to Germany on the culturally closer Diaspora of existing immigrants from Turkey and Middle-Eastern and North African countries (T-MENA). The sudden and massive inflow of refugees to Europe around the year 2015, dominated by refugees originating from Middle-Eastern countries such as Syria and Iraq, is generally referred to as the European refugee crisis (ERC). With regards to the economic impact of the ERC, first, we find that the T-MENA immigrants in Germany observed a reduction in unemployment in the immediate aftermath of the crisis. We interpret these findings to be consistent with the differential demand shock induced by the refugees’ consumption of culturally similar goods and services (e.g. ethnic grocery stores, restaurants serving halal food, refugee relief services or Flüchtlingshilfe, etc.) on T-MENA immigrants. We further find that starting next year the unemployment effects dissipated, a finding coinciding with refugees’ incremental yet delayed entry into the labor market resulting in disproportionately increased labor market competition for T-MENA immigrants. The analysis of the effect heterogeneity suggests that the treatment effects on respondent's unemployment were non-transitory and smaller for T-MENA immigrants with good German skills, whereas, they were larger for first-generation T-MENA immigrants. Our analysis does not yield any results for T-MENA immigrants' weekly hours worked and hourly wages. Second, we study the ERC’s impact on T-MENA immigrants’ social outcomes, measured in their self-reported social worries (about further immigration, crime development, and xenophobic hostility) and assimilation of the host identity. We find that, although all immigrants in Germany reported increases in their social worries, especially about further immigration to Germany, T-MENA immigrants reported statistically significant smaller increases. Additionally, we find that the unconditional support shown by German nationals towards incoming Middle-Eastern refugees reinforced the belief of German identity among T-MENA immigrants. Finally, we do not find any effects on T-MENA immigrants’ subjective wellbeing measured in their satisfaction towards life and health.