Immigration and Wages: Evidence from Construction

Authors


  •  Corresponding author: Bernt Bratsberg, Frisch Centre, Gaustadalleen 21, 0349 Oslo, Norway. Email: bernt.bratsberg@frisch.uio.no.

  • We gratefully acknowledge the helpful discussions with and comments of Rolf Andersen, Erling Barth, George Borjas, Jon Erik Dølvik, Christian Dustmann, Line Eldring, Steinar Holden, Olav Magnussen, Kalle Moene, Jim Ragan, Stein Reegård, Marianne Røed, Pål Schøne, Sverre Try, Eskil Wadensjö, Heidi Wølneberg, two anonymous referees and the editor. We also acknowledge funding from Norface (Project No. 415), the Norwegian Research Council (Grant No. 17352/S20), and the Ministry of Labour. This study is part of the research activities of the centre of Equality, Social Organisation, and Performance (ESOP), University of Oslo. Data made available by Statistics Norway have been essential for this research.

Abstract

To identify wage impacts of immigration, we use licensing requirements in the Norwegian construction sector that give rise to exogenous variation in immigrant employment across trades. Individual panel data reveal lower wage growth in trades with rising immigrant employment shares, with a 10% increase in immigration predicted to reduce wages by 0.6%. Selective attrition masks the causal wage impact if neglected. For low and semi-skilled workers, wage effects are comparable for natives and older immigrant cohorts, consistent with perfect substitutability between native and immigrant labour within trade. Price data indicate that wage and cost reductions are passed on to consumers.

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