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Immigrants-Natives Complementarities in Production: Evidence from Italy

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  • Agnese Romiti

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    (CeRP-Collegio Carlo Alberto and Tor Vergata University)

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    Abstract

    This paper studies the impact of immigration on the Italian labour market using administrative data on Italian private-sector employees during the period 1995-2004. The analysis adopts a structural model based on a two levels CES production function extending the model in Card (2001) in order to allow for imperfect substitution between immigrants and natives within the same area-skill cell, other than between high and low skilled labour inputs. The endogeneity of labour supply is controlled for by using an instrument based on the (1985) historical immigrants' settlement as in Card (2001). The results, robust to the osetting role of other factors' movements, provide evidence of a small but detectable degree of imperfect substitution between immigrants and natives. Despite immigrants not having any eect on natives' employment, the simulation based on the estimated parameters suggests that the actual ow of low-skilled immigrants over the period of analysis has reduced the wages only of similarly skilled immigrants (1%), with no impact on natives. At the same time the inow of immigration has increased the return to skill for natives.

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    Bibliographic Info

    Paper provided by Center for Research on Pensions and Welfare Policies, Turin (Italy) in its series CeRP Working Papers with number 105.

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    Length: 34 pages
    Date of creation: Nov 2011
    Date of revision:
    Handle: RePEc:crp:wpaper:105

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    Related research

    Keywords: Wages; international migration; skill complementarities; labour supply;

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