The Swiss Mass Immigration Initiative: The Impact of Increased Policy Uncertainty on Expected Firm Behaviour

KOF Studies No. 53

37 Pages Posted: 30 Oct 2014

See all articles by Klaus Abberger

Klaus Abberger

ETH Zurich - KOF Swiss Economic Institute

Andreas Dibiasi

EURAC Research; ETH Zurich - KOF Swiss Economic Institute

Michael Siegenthaler

ETH Zurich - KOF Swiss Economic Institute

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 29, 2014

Abstract

In Switzerland a sudden policy uncertainty shock happened in February 2014 with the close and largely unexpected acceptance of a referendum aiming at limiting free movement of persons. The referendum requires Switzerland to reintroduce annual quotas for immigrants within three years. The referendum is vaguely formulated and its actual consequences are largely unknown. Yet, the vote reduced the expected future availability of qualified labour, put at stake several economically important agreements between Switzerland and the European Union, and reduced expected future domestic demand for firms. This paper uses a special survey conducted by the KOF Swiss Economic Institute to analyse the short- to medium-run expected consequences of this substantial policy uncertainty shock on firms’ private fixed investment and employment plans. We find that those firms that believe that potential growth in Switzerland will deteriorate and those that report that investment uncertainty has increased are also the ones that see a significant reduction in their future investment activities and their expected employment due to the vote, so that an uncertainty effect is present. We also provide evidence that the short-term effect of policy uncertainty on investment is economically significant.

Keywords: uncertainty, investment, Employment, Switzerland, employment, Mass Immigration Initiative, sentiment, business survey

JEL Classification: D84, E22, E24, E66, F22, J21, J61, J68, L53, O15

Suggested Citation

Abberger, Klaus and Dibiasi, Andreas and Siegenthaler, Michael and Sturm, Jan-Egbert, The Swiss Mass Immigration Initiative: The Impact of Increased Policy Uncertainty on Expected Firm Behaviour (October 29, 2014). KOF Studies No. 53. Available at SSRN: https://ssrn.com/abstract=2516227 or http://dx.doi.org/10.2139/ssrn.2516227

Klaus Abberger

ETH Zurich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Andreas Dibiasi (Contact Author)

EURAC Research ( email )

Viale Druso, 1
Drususallee 1
Bolzano / Bozen, 39100
Italy

ETH Zurich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Michael Siegenthaler

ETH Zurich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich ( email )

Zurich
Switzerland

HOME PAGE: http://www.kof.ethz.ch

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, 81679
Germany

HOME PAGE: http://www.cesifo.de

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