The effect of mass influx on labor markets: Portuguese 1974 evidence revisited



: Makela E

Publisher: ELSEVIER SCIENCE BV

: 2017

: European Economic Review

: EUROPEAN ECONOMIC REVIEW

: EUR ECON REV

: 98

: 240

: 263

: 24

: 0014-2921

: 1873-572X

DOI: https://doi.org/10.1016/j.euroecorev.2017.06.016


This paper provides a reappraisal of the evidence from the influx that has been unique in the recent European history, the flood of half a million returnees from Mozambique and Angola to Portugal in the mid-1970s. The objective of this paper is to study the impacts of a large supply shock on aggregate labor productivity, wages and unemployment. In contrast to the previous evidence, the synthetic control analyses find that the influx had a significant adverse effect on labor market outcomes. The results suggest that the Portuguese labor market responded precisely the same way as the standard textbook model predicts: an increase in the number of workers lowered average labor productivity and wages. (C) 2017 Elsevier B.V. All rights reserved.



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