Abstract
This paper introduces a novel approach to estimating immigration impacts on natives’ labor market outcomes. Differential language requirements across occupations serve as an arguably exogenous source of variation during the large and sudden immigration surge to Norway after the enlargements of the European labor market in 2004 and 2007. Migrant inflow into occupations is instrumented with occupations’ required level of (Norwegian) language skills. Administrative register data allow for a rich set of individual-level outcomes. Comparing workers in occupations with different language requirements, I find that a one percentage point increase in the share of Eastern European workers reduced native workers’ labor earnings by 0.75 percent. I further find adverse employment effects and evidence of skill-upgrading, but largely no other form of worker mobility among treated individuals. In particular, young woŕkers were hit in the wage dimension and old workers in the employment dimension. The results are highly robust.
Highlights
What happens to the labor-market careers of native workers after a sudden inflow of migrants into their occupations? The question is difficult to answer empirically because labor-demand changes affect migration flows, causing a simultaneity problem
The crucial assumption for a causal interpretation of the estimated earnings effect is that the earnings trends in occupations with varying language requirements would have been equal in the absence of immigration, conditional on the control variables
I estimate the baseline model with earnings prior to the immigration surge as the dependent variable, keeping everything else equal except frommoving the earnings growth control variable
Summary
What happens to the labor-market careers of native workers after a sudden inflow of migrants into their occupations? The question is difficult to answer empirically because labor-demand changes affect migration flows, causing a simultaneity problem. I exploit the relationship in the left panel of Fig. 1 to estimate the causal effect of the historically large labor immigration surge to Norway on natives’ occupation-specific outcomes—that is, labor earnings, several employment outcomes, and various mobility forms. Two related Norwegian studies by Bratsberg and Raaum (2012) and Finseraas et al (2019) exploit differential licensing requirements among occupations in the construction sector Both estimate almost identical wage effects as my earnings estimate. My results align with these studies, as well, the identified effect is relative to workers in occupations with different language requirements rather than different experience levels within education cells.
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