Abstract
A pervasive, yet little acknowledged feature of international migration to developed countries is that newly arriving immigrants are increasingly highly skilled since the 1980s. This paper analyses the determinants of changes in the skill composition of immigrants using a framework suggested by Grogger & Hanson (2011). We focus on Switzerland, which continuously showed very high immigration rates and dramatic changes in the skill composition of immigrants. In addition, the recent integration of Switzerland into the European labour market in 2002 serves as a policy experiment which allows analysing the influence of a reduction on immigration restrictions on immigrants from European countries in comparison to those from other countries. Our findings suggest that changes of education supply in origin countries and shifts to the relative demand for education groups stand out as the two most important drivers. Yet, while supply alone predicts only a modest increase in the case of highly educated workers and a large increase of middle educated workers, one particular demand channel, the polarisation of labour demand induced by the adoption of computer capital, is crucial to explain the sharp increase in highly educated workers and the mere stabilisation of the share of middle educated immigrant workers. The abolition of quotas for EU residents played a smaller role, yet may have slightly reduced the high skill share among immigrants relative to immigrants from other countries.
Highlights
Which factors drive the skill composition of immigrants? A pervasive feature of international migration flows to developed countries in the last decades is that newly arriving immigrants are increasingly highly skilled
We find that the effect of lowering immigration restrictions on the skill composition was strongest in case of old EU member states, for which immigration quotas were phased-out completely already in 2007.7 In contrast, the effect is not distinguishable from zero in case of new EU member states for which some quotas were kept in place until 2011
The AFMP eventually liberalised Swiss labour market access for all European countries, it is likely that the differential abolition of quotas for immigrants from EU17 and EU10 countries led to a heterogenous response in these two cases
Summary
Which factors drive the skill composition of immigrants? A pervasive feature of international migration flows to developed countries in the last decades is that newly arriving immigrants are increasingly highly skilled. The changes in the share of highly educated immigrants have been very uneven across countries with large gains in countries such as Australia, Canada, the UK and Switzerland and more modest changes in France or Germany (Docquier & Marfouk, 2005) These trends have gained more saliency in the light of an ongoing discussion among policy makers whether skilled immigration could serve as a palliative for increasing labour shortages of skills in developed countries. There seems to be little agreement on the actual drivers of skill scarcity and whether and how policy makers should respond by adapting immigration policies (Chaloff & Lemaitre, 2009; Stevens et al, 2009) From this perspective, it is surprising that the factors driving these trends have received relatively scant attention in the academic literature
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