Labour Market Effects of Immigration: an Empirical Analysis Based on Italian Data

Gavosto, Venturini, Villosio (1999) found that the impact of immigrants on the wage rates of natives was positive. This result has led to the present paper which analyses the effect of immigrants on native employment. Two aspects of being unemployed are considered: i) displacement risk, the probability of moving from employment into unemployment; and ii) job-search effectiveness, the probability of moving from unemployment into employment within one year. The quarterly Labour Force Survey data (ISTAT) from 1993 to 1997 are used. The transition probabilities depend on two sets of independent variables at time t: the individual’s characteristics and the external conditions of the market. A probit model is applied for repeated-cross-sections on “specific” local areas in order to check for possible autocorrelation and endogeneity. The results show that in the North of Italy, where most immigrants are located, the share of immigrants has either no effect or has a complementary effect on the probability of finding a job in the case of workers looking for a new job; while in the case of people looking for a first job (young people) the effect was negative in 1993; while it was positive in the last years. A complementary effect prevails in the case of native transition from employment to unemployment. There is a negative effect only in the manufacturing sector in Northern Italy for 1996, and this is probably due to other factors, such as the increased use of temporary contracts in that area during that year.