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Does Low Skilled Immigration Increase Profits? Evidence from Italian Local Labour Markets

Giorgio Brunello (), Elisabetta Lodigiani and Lorenzo Rocco

No 450, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: We study the effects of low skilled immigration on firm profits, average wages, capital and total factor productivity (TFP) by combining firm-level and local labour market data from Italy. We find that low skilled immigration increases profits. This effect is small on average, larger for small firms and considerably larger for firms operating in local labour markets with a higher than median share of (before sample) low skilled employment. In these areas, substitution effects reduce average wages much more than elsewhere. Low skilled immigration has increased profits by lowering average wages and by increasing the capital stock, with no effect on TFP.

New Economics Papers: this item is included in nep-eff and nep-ure
Date: 2019-05-28, Revised 2019-05-28
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