FRAL - Programme franco-allemand en Sciences humaines et sociales

How Immigration Impacts Natives' Wages: Investigating Cross-Country Differences – NaWaCC

How Immigration Impacts Natives’ Wages: Investigating Cross-Country Differences

France and Germany are two major countries of immigration in Europe. In 2010, foreign-born individuals represented 7.2% and 6.3% of their respective population. Although the economic situation in France and Germany differs a lot, the recent increase in asylum demands and illegal immigration has raised a vivid debate on the strictness of immigration policies in both countries. The economic consequences of immigration, especially for native workers, are at the centre of this debate.

Issues raised and objectives

In three scientific work-packages (WPs), this project will investigate the impact of immigrant workers on natives’ jobs and wages. We will go beyond the existing literature by investigating why the impact of immigrants varies across countries. We will give a particular attention to task allocation and production strategies (WP1) and to trade integration (WP2) to detect conditional labour market effects of immigration. We will also investigate the interplay between labour market effects and immigration policies (WP3).

WP1 will focus on the demand side of the labour market. We will explore how immigration affects task allocation within and across firms. We will also investigate the link between foreign employment and firms’ production strategies (such as outsourcing). We will focus on both France and Germany.
WP2 will investigate to what extent the impact of immigrants on natives’ wages is conditioned by trade integration and subsequent characteristics of an economy such as the level of granularity (i.e. the domination of large firms). We will perform a cross-country analysis and a study on France.
WP3 will study, both theoretically and empirically, the political determinants of immigration policies across European countries toward different types of immigrants. It will also explore how the degree of substitution between natives and immigrants relates to the determination of immigration policies.
WP4 will organise the research cooperation. The project includes researchers with strong complementarities which are required to achieve this project that emerges at the interface of migration economics, international trade and the political economy of immigration. While both teams will work on task allocation and production strategies (WP1), the French team will look at trade integration and aggregate issues (WP2) and the German team will focus on immigration policies (WP3). Research efforts are set to happen as joint papers. We also expect an exchange of good practices on the use of the French and German employer-employee data.

One paper has been published in an international peer-reviewed journal, Marchal and Nedoncelle (Review of International Economics, 2019), which investigates the export-enhancing effect of immigrant workers and how this effect varies across occupations. Results show that immigrants in both low- and high-skilled occupations foster exports at both the intensive and the extensive margins. In addition, this effect is spread across all export destinations.

In another work in progress, Marchal and Wildnerova use administrative data on French manufacturing firms from 2005 to 2015, and find that exporters facing an increase in foreign demand hire more immigrant workers, especially immigrants under permanent contracts. They also find that firms employ immigrants because these workers relax informational barriers.

In another work in progress Oreffice and Peri use French matched employer-employee (DADS) data to document a novel fact about the hiring decision of French firms. Positive changes in the local supply of immigrant workers improve the matching between workers and firms. This is a quantitatively significant and yet unexplored channel through which immigrants may be beneficial to local productivity.

The project has made great progress, especially regarding the first work-package of the project (1 publication and 3 work in progress have been produced on this topic). The other work-packages are making progress as planned.

Léa Marchal and Clément Nedoncelle. (2019) Immigrants, Occupations and Firm Export Performance. Review of International Economics, 27(3): 1480-1509. onlinelibrary.wiley.com/doi/full/10.1111/roie.12432

France and Germany are two major countries of immigration in Europe. In 2010, foreign-born individuals represented 7.2% and 6.3% of their respective population (Brücker et al., 2013). Despite different economic situations with respect to inequality and unemployment, the recent increase in asylum demands and illegal immigration has raised a vivid debate on the strictness of immigration policies in both countries. The economic consequences of immigration, especially for native workers, are at the centre of this debate.
In three scientific work-packages (WPs), this project will investigate the impact of immigrant workers on natives’ jobs and wages. We will go beyond the existing literature by investigating why the impact of immigrants varies across countries. We will devote particular attention to task allocation and production strategies (WP1) and to trade integration (WP2) to detect conditional labour market effects of immigration. We will also investigate the interplay between labour market effects and immigration policies (WP3).
WP1 will focus on the demand side of the labour market. We will explore how immigration affects task allocation within and across firms. We will also investigate the link between foreign employment and firms’ production strategies (such as outsourcing).
WP2 will investigate to what extent the impact of immigrants on natives’ wages is conditioned by trade integration and subsequent characteristics of an economy such as the level of granularity (i.e. the domination of large firms).
WP3 will study, both theoretically and empirically, the political determinants of immigration policies across European countries toward different types of immigrants. It will also explore how the degree of substitution between natives and immigrants relates to the determination of immigration policies.
WP4 will organise the research cooperation. The project includes researchers with strong complementarities which are required to achieve this project that emerges at the interface of migration economics, international trade and the political economy of immigration. While both teams will work on task allocation and production strategies (WP1) and at trade integration and aggregate issues (WP2), the German team will focus on immigration policies (WP3). Research efforts are set to happen as joint papers. We also expect an exchange of good practices on the use of the French and German employer-employee data.
We will actively communicate on our results. Final results will be published in top-field/top-20 journals and research-based policy recommendations will be communicated through policy papers. Overall, the project will feed the public debate by providing a better understanding of the economic consequences of immigration in Europe.

Project coordinator

Monsieur Jérôme HÉRICOURT (Lille Economie et Management (UMR CNRS))

The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.

Partner

LEM-CNRS (UMR 9221) Lille Economie et Management (UMR CNRS)
IfW Kiel Institute for the World Economy

Help of the ANR 385,977 euros
Beginning and duration of the scientific project: April 2018 - 36 Months

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