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The Effects of Immigration on Wages: An Application of the Structural Skill-Cell Approach

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  • Michael Gerfin
  • Boris Kaiser

Abstract

This paper investigates how recent immigration inflows from 2002 to 2008 have affected wages in Switzerland. This period is of particular interest as it marks the time during which the bilateral agreement with the EU on the free cross-border movement of workers has been effective. Since different types of workers are likely to be unevenly affected by recent immigration inflows, we follow the "structural skill-cell approach". This paper provides two main contributions. First, we estimate empirically the elasticities of substitution between different types of workers in Switzerland. Our results suggest that natives and immigrants are imperfect substitutes. Regarding different skill levels, the estimates indicate that workers are imperfect substitutes across broad education groups and across different experience groups. Second, the estimated elasticities of substitution are used to simulate the impact on domestic wages using the actual immigration inflows from 2002 to 2008. For the long run, the simulations produce some notable distributional consequences across different types of workers: While previous immigrants incur wage losses (-1.6%), native workers are not negatively affected on average (+0.4%). In the short run, immigration has a negative macroeconomic effect on the average wage, which, however, gradually dies out in the process of capital adjustment.

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Bibliographic Info

Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp1012.

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Date of creation: Sep 2010
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Handle: RePEc:ube:dpvwib:dp1012

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Related research

Keywords: Immigration; Wages; Labour Demand; Labour Supply; Skill Groups;

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References

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  1. repec:ese:iserwp:2008-17 is not listed on IDEAS
  2. Francesco D'Amuri & Gianmarco I. P. Ottaviano & Giovanni Peri, 2008. "The Labor Market Impact of Immigration in Western Germany in the 1990's," Temi di discussione (Economic working papers) 687, Bank of Italy, Economic Research and International Relations Area.
  3. John P. Haisken-DeNew & Klaus F. Zimmermann, . "Native Wage Impacts of Foreign Labor," Working Papers 9408, SELAPO Center for Human Resources.
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Cited by:
  1. Anthony Edo, 2013. "The Impact of Immigration on Native Wages and Employment," Documents de travail du Centre d'Economie de la Sorbonne 13064, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  2. Anthony Edo, 2013. "The Impact of Immigration on Native Wages and Employment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881131, HAL.
  3. Siegenthaler, Michael & Basten, Christoph, 2013. "Do immigrants take or create residents jobs? Quasi-experimental evidence from Switzerland," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79780, Verein für Socialpolitik / German Economic Association.
  4. Sandro Favre, 2011. "The impact of immigration on the wage distribution in Switzerland," ECON - Working Papers 022, Department of Economics - University of Zurich.
  5. Christoph Basten & Michael Siegenthaler, 2013. "Do immigrants take or create residents’ jobs? Quasi-experimental evidence from Switzerland," KOF Working papers 13-335, KOF Swiss Economic Institute, ETH Zurich.

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