What drives the substitutability between native and foreign workers? Evidence about the role of language

Elena Gentili () and Fabrizio Mazzonna
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Elena Gentili: Istituto di Economia Politica (IdEP), Università della Svizzera Italiana, Switzerland.

IdEP Economic Papers from USI Università della Svizzera italiana

Abstract: This paper investigates the role of language in determining the degree of substitutability between foreign and native workers. To this end, we focus on Switzerland, an immigration-receiving country with four official languages spoken, three of which in common with bordering countries. We modify the model proposed by Ottaviano and Peri (2012) to account for the linguistic background of native and immigrant workers. We find that language plays a central role in determining the elasticity of substitution between foreign and native workers and accounts for much of their imperfect substitutability. These findings are robust to a number of robustness checks, such as different specifications of the model structure and the inclusion of cross-border workers. Then, we compute the total wage change for native and foreign workers caused by new immigration in flows. In the long run, the average percentage wage changes for native and foreign workers are quite small and not significant.

Keywords: International migration; Immigrant-native substitutability; Language (search for similar items in EconPapers)
JEL-codes: J31 J6 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2017-05
New Economics Papers: this item is included in nep-dcm and nep-mig
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Citations: View citations in EconPapers (3)

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Journal Article: What drives the substitutability between native and foreign workers? Evidence about the role of language (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:lug:wpidep:1702

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