Do Immigrants Take or Create Residents’ Jobs? Evidence from Free Movement of Workers in Switzerland*

Abstract

AbstractIn 2002, Switzerland began to adopt free movement of workers with the European Union. We study the effects of the resulting immigration wave on resident workers. We focus on the level of national skill groups and propose an instrumental variable approach to address the endogeneity of immigration in this setting. Mostly relying on administrative data for the 2002–2011 period, we find that the immigration of foreign workers reduced unemployment of residents, and had limited adverse effects on their wages and employment. One reason for this is that younger residents changed to more demanding jobs as a response to the arrival of immigrants.