Trading off wage for workplace safety? Gaps between immigrants and natives in Italy

Abstract

We employ Italian administrative data to analyze the differentials in wages and workplace injuries between immigrants and natives over the 1994–2012 period. Via propensity score reweighting, we construct the factual and counterfactual, marginal and joint distributions of wages and workplace injuries. Examining the differentials along the entire distributions, our approach yields novel insights on their potential drivers. Our findings confirm that immigrants face lower wages and a substantially higher injury risk than natives; futhermore, they highlight that foreign-born workers display a disproportionate concentration of injuries around the minimum contractual wages. Our results show that the latter can be interpreted as an unintended effect of minimum contractual wages. Indeed, if wages are downward rigid and workplace safety investments are costly, firms employing low-wage workers may reallocate their savings away from wages onto safety. Over time, the gap is found to shrink. Our analysis suggests that, beyond the reduction in workplace intensity during recessions, this may be due to destruction of marginal jobs. Being disproportionally concentrated in marginal occupations, then, lower-skilled migrant workers are more vulnerable to downturns in the economic cycle. Overall, our results highlight that labour market segmentation may co-exist with wage regulations.