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What drives the substitutability between native and foreign workers? Evidence about the role of language

Author

Listed:
  • Elena Gentili

    (Istituto di Economia Politica (IdEP), Università della Svizzera Italiana, Switzerland.)

  • Fabrizio Mazzonna

    (Istituto di Economia Politica (IdEP), Università della Svizzera Italiana, Switzerland; Munich Center for the Economics of Aging (MEA).)

Abstract
This paper investigates the role of language in determining the degree of substitutability between foreign and native workers. To this end, we focus on Switzerland, an immigration-receiving country with four official languages spoken, three of which in common with bordering countries. We modify the model proposed by Ottaviano and Peri (2012) to account for the linguistic background of native and immigrant workers. We find that language plays a central role in determining the elasticity of substitution between foreign and native workers and accounts for much of their imperfect substitutability. These findings are robust to a number of robustness checks, such as different specifications of the model structure and the inclusion of cross-border workers. Then, we compute the total wage change for native and foreign workers caused by new immigration in flows. In the long run, the average percentage wage changes for native and foreign workers are quite small and not significant.

Suggested Citation

  • Elena Gentili & Fabrizio Mazzonna, 2017. "What drives the substitutability between native and foreign workers? Evidence about the role of language," IdEP Economic Papers 1702, USI Università della Svizzera italiana.
    • Handle: RePEc:lug:wpidep:1702
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    References listed on IDEAS

    as
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    2. Andreas Beerli & Jan Ruffner & Michael Siegenthaler & Giovanni Peri, 2021. "The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland," American Economic Review, American Economic Association, vol. 111(3), pages 976-1012, March.
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    Cited by:

    1. Nicolò Gatti & Fabrizio Mazzonna & Raphaël Parchet & Giovanni Pica, "undated". "Opening the labor market to qualified immigrants in absence of linguistic barriers," Development Working Papers 483, Centro Studi Luca d'Agliano, University of Milano.
    2. Nicolò Gatti & Fabrizio Mazzonna & Raphaël Parchet & Giovanni Pica, 2023. "Opening the labor market to qualified immigrants: a double-edged sword for native employees," IdEP Economic Papers 2201, USI Università della Svizzera italiana.

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    More about this item

    Keywords

    International migration; Immigrant-native substitutability; Language;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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