The Labor Market Effects of Opening the Border: New Evidence from Switzerland
Andreas Beerli and Giovanni Peri, 2015.
Between 1999 and 2007 Switzerland opened its labor markets to immigrants from the European Union (EU), fully liberalizing access by 2007. The timing of this labor market liberalization differed by geography, however. In particular, cross-border workers, who constituted more than half of EU immigrants, were allowed free-entry into the border region (BR), but not the non-border region (NBR), already in 2004. In this paper, we exploit the different timing of these policies in a difference-in-difference approach and estimate the effects of the policy changes on the inflow of new immigrants and on native labor market outcomes such as wages and employment by comparing the BR and NBR. We find that opening the border to EU immigrants increased their presence by 4 percent of employment, and this had no significant impact on average native wages and employment. Decomposing the effect between skill groups we find that immigrants complemented highly educated native workers, while they displaced middle educated workers and had no effect on less educated.