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Segmentation by skills and wage discrimination in a trans-border labor market

  • Gonzalez, Oscar

    ()

  • Maggi, Rico

    ()

Global markets, free mobility and political integration among nation states should have a relevant impact on key issues in regional labor market studies, such as immigration, segmentation and delimitation. This paper presents an economic analysis of the impacts on segmentation, salary and human capital of the tight Swiss regulation imposed in past on immigrant workers. The case studied is the canton Ticino, a labor market whose gravity center is located at 20 km form the Italian border and 50 km from the center of the agglomeration of Milan. This very specific location allows to study the differentiated impacts on salaries, contract duration and allocation to industries of trans-border commuters as compared to short and long term immigrants. First evidence indicates the presence of a relevant immigration surplus (Borjas 1995) for the Ticino economy in the case of commuters and seasonal immigrants on the lower scale of qualification. Concerning more qualified labor force, empirical analysis of wage functions indicate a segmentation with respect to duration of contracts, more stable contracts being offered to resident workers. Here, the benefits are reaped by the protected labor force while industry does not seem to realize a significant surplus. The paper end with a theoretical discussion of the possible changes provoked by the imminent change in regulation implied by bilateral treaties on free mobility with the EU entering in vigor this year and draws some conclusions on the future relevance of the concept of border regions in a labor market context.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa02p445.

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Date of creation: Aug 2002
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Handle: RePEc:wiw:wiwrsa:ersa02p445
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  1. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
  2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  4. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692 Elsevier.
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