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Welcome to the machine: firms' reaction to low-skilled immigration

Author

Listed:
  • Antonio Accetturo

    () (Bank of Italy)

  • Matteo Bugamelli

    () (Bank of Italy)

  • Andrea Lamorgese

    () (Bank of Italy)

Abstract

We assess the impact of low-skilled immigration on capital intensity. We first present a model characterized by frictions in the labor market and firms' asymmetric information on workers' skills and show that firms can react to the immigration-induced reduction of their workforce's skill level by increasing the capital-labor ratio. We test the predictions of the model on a sample of Italian manufacturing firms over the period 1996-2007, finding that increased immigration of low-skilled workers from developing countries, measured at the provincial level and instrumented with pre-existing enclaves of immigrants and network effects, raises capital intensity. In line with the predictions of the theoretical model, the impact of immigration, which is quite robust across empirical specifications, is stronger for larger firms and in skill-intensive sectors.

Suggested Citation

  • Antonio Accetturo & Matteo Bugamelli & Andrea Lamorgese, 2012. "Welcome to the machine: firms' reaction to low-skilled immigration," Temi di discussione (Economic working papers) 846, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_846_12
    as

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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2012/2012-0846/en_tema_846.pdf
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    References listed on IDEAS

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    1. Ethan Lewis, 2005. "Immigration, Skill Mix, and the Choice of Technique," Working Papers 05-04, Center for Economic Studies, U.S. Census Bureau.
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    10. Bontempi, Maria Elena & Golinelli, Roberto & Parigi, Giuseppe, 2010. "Why demand uncertainty curbs investment: Evidence from a panel of Italian manufacturing firms," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 218-238, March.
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    Citations

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    Cited by:

    1. Strom, Steinar & Venturini, Alessandra & Villosio, Claudia, 2013. "Wage Assimilation: Migrants versus Natives and Foreign Migrants versus Internal Migrants," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201341, University of Turin.
    2. Mocetti, Sauro & Porello, Carmine, 2010. "How does immigration affect native internal mobility? New evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 427-439, November.
    3. Giuseppe Arcangelis & Edoardo Porto & Gianluca Santoni, 2015. "Immigration and manufacturing in Italy: evidence from the 2000s," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 163-187, June.
    4. Stefania Borelli & Giuseppe De Arcangelis, 2016. "Migration, Labor Tasks and Production Structure in Europe," Working Papers 4/16, Sapienza University of Rome, DISS.
    5. repec:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-017-0064-4 is not listed on IDEAS
    6. Giulia Bettin & Alessia Lo Turco & Daniela Maggioni, 2014. "A firm level perspective on migration: the role of extra-EU workers in Italian manufacturing," Journal of Productivity Analysis, Springer, vol. 42(3), pages 305-325, December.
    7. Ivan Etzo & Carla Massidda & Paolo Mattana & Romano Piras, 2017. "The impact of immigration on output and its components: a sectoral analysis for Italy at regional level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 533-564, December.
    8. De Arcangelis, Giuseppe & Di Porto, Edoardo & Santoni, Gianluca, 2015. "Migration, labor tasks and production structure," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 156-169.
    9. Barone, Guglielmo & Mocetti, Sauro, 2011. "With a little help from abroad: The effect of low-skilled immigration on the female labour supply," Labour Economics, Elsevier, vol. 18(5), pages 664-675, October.

    More about this item

    Keywords

    capital intensity; low-skilled migration; firm heterogeneity;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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