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Immigrants and Firms' Productivity: Evidence from France

  • Cristina Mitaritonna
  • Gianluca Orefice
  • Giovanni Peri

Immigrants may complement native workers, allow reallocation by skill in the firm and lower costs. These effects could be beneficial for the firm and increase its productivity and profits. However not all firmes use immigrants. Allowing firms to have differential fixed cost in hiring immigrants, because of different information and access to their network, we analyze the impact of an increase in local supply of immigrants on firms' immigrant employment and productivity. Using micro-level data on French firms during the period 1995-2005, we show that a supply-driven increase in foreign born workers in a department (location) increases the productivity of firms in that department. We also find that this effect is significantly stronger for firms with initially low (or zero) level of foreign employment. Those are also the firms whose share of immigrants increases the most. We also find that the positive productivity effect of immigrants is associated with faster growth of capital and improved export performances (for extensive and intensive margin) of the firms. While these outcomes depend on the firm share of immigrants in employment we find a positive effect of immigration on wages of natives and on specialization of natives in complex occupations that is common to all firms in the district. Supply-driven increase in foreign born workers in a department (location) implies a re-allocation of native workers towards communication and cognitive intensive tasks.

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Paper provided by CEPII research center in its series Working Papers with number 2014-09.

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Date of creation: Mar 2014
Date of revision:
Handle: RePEc:cii:cepidt:2014-09
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  1. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
  2. Sanne Hiller, 2013. "Does immigrant employment matter for export sales? Evidence from Denmark," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(2), pages 369-394, June.
  3. Michaela Trax & Stephan Brunow & Jens Suedekum, 2012. "Cultural diversity and plant‐level productivity," Norface Discussion Paper Series 2012029, Norface Research Programme on Migration, Department of Economics, University College London.
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  7. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2011. "Trade and Migration: Firm-Level Evidence (LONG VERSION)," Working Papers 2011:6, Örebro University, School of Business.
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  11. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
  12. Ilke Van Beveren, 2012. "Total Factor Productivity Estimation: A Practical Review," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 98-128, 02.
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  15. Malchow-Møller, Nikolaj & Munch, Jakob Roland & Rose Skaksen, Jan, 2009. "Do Immigrants Affect Firm-Specific Wages?," Working Papers 07-2008, Copenhagen Business School, Department of Economics.
  16. Anette Haas & Michael Lucht, 2013. "Heterogeneous Firms and Imperfect Substitution: The Productivity Effect of Migrants," Norface Discussion Paper Series 2013019, Norface Research Programme on Migration, Department of Economics, University College London.
  17. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
  18. Christian Dustmann & Tommaso Frattini & Ian P. Preston, 2013. "The Effect of Immigration along the Distribution of Wages," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 145-173.
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