Winners and Losers of Immigration

60 Pages Posted: 24 Aug 2020

See all articles by Davide Fiaschi

Davide Fiaschi

University of Pisa

Cristina Tealdi

Heriot-Watt University; IZA Institute of Labor Economics

Abstract

We aim to identify winners and losers of a sudden inflow of low-skilled immigrants using a general equilibrium search and matching model in which employees, either native or nonnative, are heterogeneous with respect to their skill level and produce different types of goods. We estimate the short-term impact of this shock for Italy in the period 2008-2017 to be sizeable and highly asymmetric. In 2017, the real wages of low-skilled and high-skilled employees were 8% lower and 4% higher, respectively, compared to a counter-factual scenario with no non-natives. Similarly, employers working in the low-skilled market experienced a drop in profits of comparable magnitude, while the opposite happened to employers operating in the high-skilled market. Finally, the presence of non-natives led to a 10% increase in GDP and to an increment of approximately 70 billions € in Government revenues and 18 billions € in social security contributions. We argue that these results help rationalise the recent surge of anti-immigrant sentiments among the low-income segment of the Italian population.

Keywords: immigration, welfare, search and matching

JEL Classification: J61, J64, J21, J31

Suggested Citation

Fiaschi, Davide and Tealdi, Cristina, Winners and Losers of Immigration. IZA Discussion Paper No. 13600, Available at SSRN: https://ssrn.com/abstract=3679006 or http://dx.doi.org/10.2139/ssrn.3679006

Davide Fiaschi (Contact Author)

University of Pisa

Lungarno Pacinotti, 43
Pisa PI, 56126
Italy

Cristina Tealdi

Heriot-Watt University ( email )

Riccarton
Edinburgh EH14 4AS, Scotland EH14 1AS
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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