Working Paper: NBER ID: w22852
Authors: Cristina Mitaritonna; Gianluca Orefice; Giovanni Peri
Abstract: In this paper we analyze the impact of an increase in the local supply of immigrants on firms’ outcomes, allowing for heterogeneous effects across firms according to their initial productivity. Using micro-level data on French manufacturing firms spanning the period 1995-2005, we show that a supply-driven increase in the share of foreign-born workers in a French department (a small geographic area) increased the total factor productivity of firms in that department. Immigrants were prevalently highly educated and this effect is consistent with a positive complementarity and spillover effects from their skills. We also find this effect to be significantly stronger for firms with low initial productivity and small size. The positive productivity effect of immigrants was also associated with faster growth of capital, larger exports and higher wages for natives. Highly skilled natives were pushed towards firms that did not hire too many immigrants spreading positive productivity effects to those firms too. Because of stronger effects on smaller and initially less productive firms, the aggregate effects of immigrants at the department level on average productivity and employment was small.
Keywords: Immigration; Firm Productivity; French Manufacturing; Heterogeneous Effects
JEL Codes: E25; F22; J15; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in total factor productivity (TFP) of firms in that department (O49) | Faster growth of capital (D25) |
| Increase in total factor productivity (TFP) of firms in that department (O49) | Larger exports (F10) |
| Increase in total factor productivity (TFP) of firms in that department (O49) | Higher wages for natives (J39) |
| Highly skilled natives pushed towards firms that do not hire many immigrants (J69) | Spread of positive productivity effects to those firms (O49) |
| Supply-driven increase in the share of foreign-born workers in a French department (J69) | Small aggregate effects on average productivity and employment (E24) |
| Supply-driven increase in the share of foreign-born workers in a French department (J69) | Increase in total factor productivity (TFP) of firms in that department (O49) |