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The Impact of Immigration on the Natives’ Labor Market Employment: Evidence from Italian Regions

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Treballs Finals del Màster d'Economia, Facultat d'Economia i Empresa, Universitat de Barcelona, Curs: 2016-2017, Tutor: Enrique López-Bazo

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The aim of this paper is to disentangle, from an empirical point of view, the economic impact of immigration into the labor markets of the Italian administrative regions. To this purpose, we have followed the empirical strategy set by Basso and Peri (2015). In order to construct the dataset, we have used information drawn from the Labor Force Survey (LFS) conducted by the National Statistic Office of Italy (ISTAT). We have performed several empirical analyses. First of all, we have computed the aggregate correlation between the change in natives’ employment and the change in immigrant population. Then, in order to disentangle the spatial correlations between foreign-born and domestic workers (see Borjas, 2014), we have divided the native population into eight education-experience cells, and computed the correlations between immigrants and natives within skill location cells. In a further step, we have introduced in our baseline specification a proxy for the labor demand growth, namely the “Bartik” instrument. Finally, to address the endogeneity issue and therefore to conclude on the causal relationship between immigrants and natives’ labor market performances, we have performed an IV/2SLS approach, using the so-called “shift-share” instrument. In general terms, the results obtained indicate that the impact of immigration on native employment is positive or null.

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The Impact of Immigration on the Natives’ Labor Market Employment: Evidence from Italian Regions