The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland

NBER Working Paper No. 25302

Issued in November 2018, Revised in January 2020

NBER Program(s):International Trade and Investment, Labor Studies, Productivity, Innovation, and Entrepreneurship



We study a reform that granted European cross-border workers free access to the Swiss labor market and had a stronger effect on regions close to the border. The greater availability of cross-border workers increased foreign employment substantially. Although many cross-border workers were highly educated, wages of highly educated natives increased. The reason is a simultaneous increase in labor demand: the reform increased the size, productivity, and innovation performance of skill-intensive incumbent firms and attracted new firms, creating opportunities for natives to pursue managerial jobs. These effects are mainly driven by firms that reported skill shortages before the reform.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25302