Migration and the Structure of Manufacturing Production. A View from Italian Provinces

45 Pages Posted: 8 Jan 2021

See all articles by Elizabeth J. Casabianca

Elizabeth J. Casabianca

Dipartimento di Analisi e Ricerca Economica, Prometeia; Polytechnic University of Marche

Alessia Lo Turco

Università Politecnica delle Marche - Department of Economics and Social Sciences

Daniela Maggioni

Polytechnic University of Marche

Date Written: November 16, 2020

Abstract

What is the impact of immigration on the product mix of the receiving economy? To answer this question we exploit variation in the presence of immigrants across Italian provinces within the period 2003-2011. We find that immigration changes the manufacturing output composition of Italian provinces in favour of less capital intensive products, without affecting the total amount of manufacturing production. This result is based on a 2SLS strategy resting on the settlement of immigrants in the pre-sample period and is in line with the predictions of standard trade models concerning the role of factor growth on product specialisation. More specifically, immigrants sustain and deepen Italy’s revealed comparative advantages in labour intensive goods. We thus add to the existing studies finding within-industry adjustments of factor usage in production rather than between-industry output adjustments in response to immigration flows. When searching for the underlying mechanisms driving our result, we discover that a larger share of immigrants promotes the local reshoring of labour intensive productions and fosters the creation of new firms in labour intensive industries.

Keywords: Immigration, Local production structure, Capital intensity

JEL Classification: F22; J61

Suggested Citation

Casabianca, Elizabeth Jane and Lo Turco, Alessia and Maggioni, Daniela, Migration and the Structure of Manufacturing Production. A View from Italian Provinces (November 16, 2020). Available at SSRN: https://ssrn.com/abstract=3731346 or http://dx.doi.org/10.2139/ssrn.3731346

Elizabeth Jane Casabianca

Dipartimento di Analisi e Ricerca Economica, Prometeia ( email )

Viale G. Marconi 43
Bologna
Italy

Polytechnic University of Marche ( email )

Piazzale Martelli 8
Ancona, 18039
Italy

Alessia Lo Turco (Contact Author)

Università Politecnica delle Marche - Department of Economics and Social Sciences ( email )

Piazzale Martelli 8
Ancona
Italy
+390712207250 (Phone)

Daniela Maggioni

Polytechnic University of Marche ( email )

Piazzale Martelli 8
Ancona, 18039
Italy

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