Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162237
Authors: 
Ruffner, Jan
Siegenthaler, Michael
Year of Publication: 
2016
Series/Report no.: 
KOF Working Papers 424
Abstract: 
What is the effect of opening the labor market to foreign workers on the success of firms? We address this question by analyzing how firms in Switzerland were affected by the introduction of the free movement of persons with the European Union (EU) countries. This immigration reform granted all EU workers free access to the Swiss labor market. Our firm-level panel data models exploit the exceptional facts that the reform incidentally affected firms at different time periods and had a stronger effect on firms close to the border. We find that the reform increased employment, skill intensity, and sales of incumbent firms, especially for those that relied heavily on foreign workers and had reported that they suffered from skill shortages before the reform. In these firms, the reform also increased labor productivity. We explain these effects through the higher innovation performance of incumbent firms and the reallocation of economic activity into highly affected regions, as evidenced by the entry of new establishments and by the changes in establishment size within multi-establishment firms.
Subjects: 
skilled immigration
immigration policy
free movement of persons
immigration restrictions
firm performance
labor mobility
firm relocation
JEL: 
J22
J61
F22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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