The impact of mass migration on the Israeli labor market

Mass migration from the former Soviet Union increased the Israeli population by 12% in the first half of the 1990s. This exodus was precipitated by the lifting of emigration restrictions in an unstable USSR and by the open immigration policy of Israel toward Soviet Jews, who faced more restrictive entry policies elsewhere. I use this natural experiment to study the impact of immigration on the labor market outcomes of native Israelis. OLS yields significant reductions in wages and small reductions in employment. However, OLS is biased if the distribution of immigrants across occupations in Israel was not exogenous to relative wage and employment conditions. I instrument for the entry of Russians into an occupation in Israel, using information on their former occupations in the USSR. There is a significant positive correlation between the former presence of the immigrants in an occupation in the USSR and their presence in that occupation in Israel. But the previous occupational choices of Russians broad were independent of Israeli wage and employment growth subsequent to their migration. IV estimates indicate that immigration did not have an adverse impact on native Israeli labor market outcomes.