Immigration - Benefit or harm for native-born workers?

Abstract: The aim of our study is to investigate the effect of immigrants on wages for natives with divergent skill level within one country. Skill level is measured as education level and the purpose is to focus on the level where it according to us is a lack in research, namely the effect on high skilled native-born worker wages. Further, our contribution to the already existing studies may be considered to be a complement. Using panel data, collected from the time period 2000-2008 for the 290 municipalities in Sweden to get regional variation, we investigate and interpret the estimated outcome of how wages for native-born workers in the Swedish labor market respond to immigration into Sweden. The main findings, when controlling for age, unemployment, and differences between year and municipalities in this study are on the short run, in line with the theory. The closer to a substitute the native-born and foreign-born workers are, the greater are the adverse effect on the wage for native-born, given that we assume immigrants as low skilled. The effect on wage for high skilled native workers in short run, when assuming immigrants and natives as complement, is positive, i.e. the wage for high skilled natives increases as the share of immigrants increases. The effect on high skilled native-born wages is positive even in mid-long run and adverse for the low and medium skilled native-workers. This is not an expected outcome since we according to theory predict the wage to be unaffected in mid-long run. This may be the result of errors in the assumption that immigrants are low skilled, or that five years is a too short time to see the expected effect in the long run; the Swedish labor market may need more time to adjust to what we predict the outcome to be.