Complementarities Between Native and Immigrant Workers in Italy by Sector

This chapter investigates the existence of complementarities between immigrant and native workers across sectors in Italy and the effects on wages due to immigration during the period 2011–2016. The analysis is based on a production function framework, where the aggregate labor is the result of a nested-CES function, and workers are differentiated according to their educational attainment, job experience, and nationality. This approach allows the analysis to estimate the elasticity of substitution between immigrant and native workers with the same education-experience level by sector. The contribution is twofold. First, it provides an estimate of the elasticity of substitution between native and immigrant workers by sector. Second, by considering explicitly the different degrees of substitutability between immigrant and native workers, the analysis provides an estimate of the wage impact for the two groups of workers at sectoral level. We find noticeable differences in the elasticity parameters across sectors. Similarly, the wage impact of immigrant is remarkably different both across sectors and between immigrant and native workers.