Immigrants' Effect on Native Workers: New Analysis on Longitudinal Data †
American Economic Journal: Applied Economics 2015, 8(2): 134 http://dx.doi.org/10.1257/app.20150114 By Mette Foged and Giovanni Peri* Using longitudinal data on the universe of workers in Denmark during the period 19912008, we track the labor market outcomes of low-skilled natives in response to an exogenous inflow of low-skilled immigrants. We innovate on previous identification strategies by considering immigrants distributed across municipalities by a refugee dispersal policy in place between 1986 and 1998. We find that an increase in the supply of refugee-country immigrants pushed less educated native workers (especially the young and low-tenured ones) to pursue less manual-intensive occupations. As a result immigration had positive effects on native unskilled wages, employment, and occupational mobility. (JEL J15, J24, J31, J61, J62) n this paper, we use individual data on Danish workers over the period 19912008 to quantify the consequences of an exogenous change in the supply of immigrants on the labor market outcomes of native workers. The administrative data that we use follow, over time, every single individual in Denmark. Hence, we can analyze different outcomes over time, control for unobserved individual characteristics, and allow for heterogeneous effects. The immigration flows that we consider combine a refugee dispersal policy, in place in Denmark between 1986 and 1998 and designed to distribute immigrants without regard to their preferences and economic considerations, and large inflows of immigrants from countries suffering from crises. These features allow us to build a credible identification strategy. This way we can make important progress in assessing the key causal questions in this literature: Do less educated immigrants displace similarly skilled native workers reducing their employment opportunities and wages? Or do they complement native skills, stimulate natives' specialization, and increase their opportunities and...
