Immigrants' Responsiveness to Labor Market Conditions and it's Implications on Regional Disparities : Evidence from Spain

Using data from the Spanish Labor Force Survey (Encuesta de Poblacion Activa) from 1999 through 2004, we explore the role of regional employment opportunities in explaining the increasing immigrant flows of recent years despite the limited internal mobility on the part of natives. Subsequently, we investigate the policy question of whether immigration has helped reduced unemployment rate disparities across Spanish regions by attracting immigrant flows to regions offering better employment opportunities. Our results indicate that immigrants choose to reside in regions with larger employment rates and where their probability of finding a job is higher. In particular, and despite some differences depending on their origin, immigrants appear generally more responsive than their native counterparts to a higher likelihood of informal, self, or indefinite employment. More importantly, insofar as the vast majority of immigrants locate in regions characterized by higher employment rates, immigration contributes to greasing the wheels of the Spanish labor market by narrowing regional unemployment rate disparities