A Macroeconomic Experiment in Mass Immigration.

The paper studies the effects of mass immigration from the former USSR to Israel in the 1990s on the employment of the native-born. The exogeneity and the size of this inflow make it a "natural experiment'' of macroeconomic proportions. An open-economy model is used to analyze this experience, focusing on the differential entry of immigrants into the labor and goods markets and the ensuing dynamic implications for labor demand. The reduced form of the model---consisting of two equations for native employment and the relative price of domestic goods---is estimated, finding negative effects of immigration on native employment a year and a half after arrival.