From Labor to Cash Flow? The Abolition of Immigration Restrictions and the Performance of Swiss Firms

86 Pages Posted: 10 May 2018

See all articles by Jan Ruffner

Jan Ruffner

ETH Zürich - KOF Swiss Economic Institute

Michael Siegenthaler

ETH Zürich - KOF Swiss Economic Institute

Date Written: November 11, 2017

Abstract

We study how a reform that granted EU workers free access to the Swiss labor market affected Swiss firms. Our firm-level Differences-in-Differences estimations exploit the fact that the reform incidentally affected firms close to the border more strongly. We find that the reform increased employment, the skill intensity, and sales of incumbent firms, especially in firms that relied heavily on foreign workers and that suffered from skill shortages before the reform. In these firms, the reform also increased labor productivity. We explain these effects through higher innovation performance of incumbents and the reallocation of economic activity into highly affected regions.

Keywords: Skilled immigration, immigration policy, free movement of persons, immigration restrictions, firm performance, labor mobility, firm relocation

JEL Classification: J22, J61, F22

Suggested Citation

Ruffner, Jan and Siegenthaler, Michael, From Labor to Cash Flow? The Abolition of Immigration Restrictions and the Performance of Swiss Firms (November 11, 2017). Available at SSRN: https://ssrn.com/abstract=3169314 or http://dx.doi.org/10.2139/ssrn.3169314

Jan Ruffner

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Michael Siegenthaler (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

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