Immigration and labour productivity: A comparative effect

Abstract

This paper examines the impact of immigration on labour productivity by distinguishing between global effects and the effects of intra-African immigration. Theoretically, intra-African immigration is expected to have relatively larger effects due to the low level of intra-African trade and the resulting differences in the prices of goods and factors. Empirically, I rely on a panel of 187 countries, including 53 African countries, over the period 1990–2019, and use a gravity-based instrumental variables approach to address endogeneity. The results show that intra-African immigration has a positive, significant, and robust impact on labour productivity in Africa. This impact is greater than the effect of immigration in the global sample and primarily occurs through improvements in total factor productivity and capital efficiency. While immigration tends to reduce capital productivity globally, intra-African immigration enhances it in Africa. Furthermore, the services sector benefits more from the positive effects of immigration.