Essays on the Effect of International Migration on Local Labor Markets: Evidence from Europe

Abstract

Besides introduction and conclusions, the thesis is composed by three empirical chapters that investigate the impact of immigration on three different outcomes of the native population, namely employment, wages and human capital accumulation. Specifically, the second chapter of the thesis, Immigration and Native Employment. Evidence from Italian Provinces in the Aftermath of the Great Recession, exploits the variability in the incidence of recent immigration inflows and the change in native employment in the Italian provinces to shed light on the impact of immigration on employment in rigid local labor markets. The study focuses on the period that followed the financial and sovereign debt crises, which strongly hit the labor markets of the Italian provinces. The results reveal a negligible overall impact of immigration on provincial employment which, however, hides differentiated impacts for different groups of natives. Employment responses to immigration shocks vary greatly depending on the skills and gender of the natives. After three rounds of revision with three referees, this chapter has been published as article in the peer-reviewed journal Papers in Regional Science. If the second chapter analyzes the impact of immigration on quantities (i.e. employment), the third one focuses instead on the effects on prices (i.e. wages), which is the other important element that immigrant inflows can influence. In this regard, this chapter, titled On the Heterogeneous Impact of Immigrants on the Distribution of Native Wages. Evidence from Recent Immigrants in Italian Provinces, provides new evidence on the extent to which immigrants affect the wage structure of the local labor markets of the host countries by proposing a methodology that combines the assessment of the impact of immigration along the native wage distribution, with a two-steps procedure that controls for changes in the composition of the native workforce, and for the endogenous allocation of immigrants across local labor markets. The analysis is carried out for Italy, which is a peculiar country as is characterized by relatively rigid product and labor markets and by well-known regional disparities, during a period of time dominated by the coexistence of the economic downturn and by the substantial increase of the migratory inflows of low-skilled individuals. The results contradict the simplistic belief that immigrants are indistinctly responsible for the decrease in native wages, and highlight instead two interesting facts. First, in line with the existing literature, foreign-born workers do not affect significantly the native average wages. Second, in terms of the impact along the native wage distribution, the effect that immigrants exert is non-negative, not even for those natives located in the lower part of the wage Distribution (which, in principle, are more similar in terms of job characteristics to immigrants, and therefore are expected experience the larger wage losses). If anything, the estimates identify instead a positive impact in the upper part of the wage distribution, which is particularly valid in the case of native women residing in the Northern provinces. However, in the more demanding specifications (that is, those with province-specific trends) this positive effect is only marginally significant. The fourth chapter of the thesis conducts instead a complementary analysis. In other words, this chapter, titled Immigration, Local Specialization in Low-skilled Sectors and Native Education. Evidence from some EU Countries, investigates the long-run native education responses to immigration in a set of European countries - namely, Portugal, Ireland, Greece and Spain - over the period 1980-2010. The analysis in this chapter sheds lights on a dimension of the impact of immigration that has been surprisingly scarcely explored in the previous literature, although it may have interesting consequences. Indeed, to measure the native education responses to immigration may provide evidence on the extent of substitutability or rather complementarity between immigrants and natives. The empirical analysis of this chapter is divided into two parts. The first, assesses the direct and indirect effects of immigration on native schooling, as well as the overall effect that encompasses the other two. Overall, the results indicate that in the period and countries considered, the presence of immigrants is associated with a reduction in the probability of natives to acquire at least upper-secondary education. The second part also considers the local employment structure and analyzes how the links between immigration and sectoral composition affect the decision of natives to invest in human capital. More in detail, I consider the specialization in low-skilled type of sectors (that is, those that require a low amount of human capital). All in all, the results indicate that the negative native education responses previously identified are stronger in regions specialized in low-skilled sectors.