Employment effects: replacement, substitution, complementarity and segmentation

Migrant workers are now a structural component of the labour market of all affluent receiving countries, accounting for a growing share of their employment. The debate about immigrants’ impact on employment focuses on whether they replace, displace or complement native workers. The chapter discusses the replacement effect that immigrants mostly play, due to the demographic and social changes that make native workers less available and less able to fill the low-skilled and poorer jobs. It highlights how structural and institutional characteristics define different degrees of segmentation between the ethnic and the native labour market across countries, structuring different models of immigrants’ economic incorporation. Social and economic mechanisms at the micro level, which explain immigrant workers’ concentration into the secondary labour market, are then reviewed, as well as the strengthening of some structural imbalances that immigrant labour contribute to perpetrate. Finally, substitution and complementarity are presented as employment effects coexisting with replacement, although involving specific segments of the labour market.