The Impact of Immigration on Native Employment: Evidence from Italy [WP]

Abstract

Whether host countries economically benefit or not from immigration is a longstanding debate. In this paper, by taking advantage of the consistent variation of foreign-born workers' settlements across local labor market, we investigate the impact of immigration on native employment in Italy over the period 2009-2017. Both the country and the time span considered represent an interesting novelty that adds a further piece of evidence to the existing literature. Despite the fact that immigration has recently become a major issue, the studies on the impact of immigration into Italy are indeed relatively scarce. In addition, the peculiar institutional framework of Italy, that plays a crucial role in the extent to which local labor markets are able to absorb immigration-induced supply shocks, makes this analysis particularly relevant. Likewise, the period analyzed is of extreme interest since it is characterized by the combination of the economic downturn and by an unprecedented increase of the migratory in inflows. Overall, the results contradict the belief that immigrants \take away jobs from natives" and present a scenario in which foreign-born workers have an average negligible impact on native employment opportunities. Consistently with the canonical model of immigration however, when distinguishing the native population by education levels, the results indicate a positive impact on high-educated natives and a strong negative one on low-educated. Nevertheless, after controlling for immigrants’ “skill-downgrading” and for natives' over-education, the negative impact estimated for the latter experiences a consistent reduction.