The productivity effects of immigrates,
A 10% increase in the supply of immigrant workers in the province implies 1.7 and 2.7 log-points increase in the TFP and in the domestic market share of the average firm, respectively. But firms’ heterogeneity matters – initially less productive and smaller firms benefit more from increases in the migrant labour supply. For firms with TFP initially below the median, a 10% increase in the local supply of immigrants implies increases of 3.6 and 8.2 log-points in TFP and domestic market share, respectively. Similarly, for firms with initial employment below the median, a 10% increase in the local supply of immigrants is associated with increases of 2.9 and 8.8 log-points in TFP and domestic market share, respectively.
One of the more controversial aspects of immigration is the employment/wage effect of an increase in immigrants
Finally, higher productivity, higher investment in physical capital, and lower exit probability should help native workers in affected firms. While immigrants may in part compete with natives for jobs, the effects described above will help existing workers, especially those in initially less-productive firms. Using the same empirical strategy, we show that an increase in the immigrant share in the province has a positive effect on the average wage of natives in the firm – a 10% increase in immigrants is associated with a five log-point increase in native wages in the average firm. This effect is slightly smaller (but still positive) for firms with low initial productivity or small initial size. Mobility and selection of native workers across firms, in response to immigrants, may explain this result – while firms with initially low TFP attract highly skilled immigrants (who in turn increase their productivity), highly skilled native workers move to firms that do not hire immigrants (those with initially high TFP). This composition effect explains why the average wage of native workers increases more in firms with smaller increase in immigrant workers (i.e. initially less-productive firms).In summary,
The mobility of highly skilled native workers towards firms that hire fewer immigrants may be an important channel of positive spillovers within a province. Firms that do not hire immigrants may experience part of the benefit via an increase in their set of skilled employees.
The immigration of highly skilled workers to France over the period 1995-2006 promoted some convergence in size and productivity levels across firms. Provinces with a large increase in immigrant supply experienced higher productivity growth of firms that were initially less productive. We find that this may be due to the fact that smaller, less productive firms were more likely to hire immigrants in order to cut costs and/or adopt new technologies, improve efficiency, and invest in capital and methods that complement the skills of immigrants. This is an interesting and previously unexplored, effect of immigration on local economies.