Under Pressure: Trade Competition from Low-Wage Countries and Demand for Immigrant Labor in Italy

Mauro Caselli and Silvio Traverso

No 1562, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This study examines whether trade competition from low-wage countries (LWCs) can influence immigration patterns in an advanced economy. We focus on Italy between 2003 and 2013, a period characterized by rising market pressure from China and Eastern Europe. Using census data on sectoral employment, administrative records on immigrants by nationality, and disaggregated bilateral trade data, we investigate whether heightened import competition acted as a pull factor for migrant workers at the local labor market level. To identify the exogenous component of these trade shocks, we adopt a shift-share instrumental variable strategy, while disaggregating immigrant data by nationality allows us to control in detail for the role of local networks and for bilateral push and pull factors. Our findings indicate that trade competition from LWCs significantly increased local immigrant shares. We hypothesize, and provide indirect evidence, that firms under competitive pressure tried to cut labor costs by relying on a more flexible, lower-paid workforce, primarily composed of foreign workers.

Keywords: Import competition; International migration; Trade shocks; Italy (search for similar items in EconPapers)
JEL-codes: F14 F16 F22 J61 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-eur, nep-int, nep-lab and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1562

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