Labor Market Competition, Wages and Worker Mobility. [PDF]
I study how removing barriers to worker mobility impacts the local labor market. Exploiting a quasi-experiment in which French border commuters gained access to the high-paying Swiss labor market, I show that the market integration leads to improved labor market outcomes among non-movers, and particularly those who are low-skilled. The difference-in-differences research design compares treated French labor markets in the border area to Switzerland with a matched control group of labor markets located in other parts of France. The empirical results show that within the first three years, low-skill wages rise by 1.6 percent and low-skill employment by around 3 percent. The results are consistent with a framework of monopsonistic competition in the labor market where firms have some wage-setting power, especially in the low-skill labor market. In the framework, the labor market integration both increases the outside options of workers and makes the supply to firms more elastic, which raises wages and employment. Enhancing worker mobility may therefore have pro-competitive effects on the labor market that reduce employers' monopsony power and improve the labor market outcomes of workers.
Work in progress
Towards Understanding the Vote Impact of Immigration.
This project assesses whether immigration changes the demand for specific distributive policies. In Switzerland, people vote regularly on various policies through referenda. I assess whether a higher presence of immigrants in the municipality decreases voters’ support of distributive policies on health insurance, unemployment insurance and old-age insurance. Using past settlements of immigrants across locations as an instrument for immigrant inflows, I find that voters decrease support for all types of distributive policies when there are more immigrants in the municipality. The results are, however, partly driven by pre-existing trends in political voting support for the major right-wing party. The evidence suggests that local trends in political preferences may be more persistent than shocks to local labor market conditions. It thus becomes harder to assess whether local labor market conditions affect political preferences.
Firm-level Adjustment to Labor Market Competition.
In monopsonistic labor markets, employers suppress wages, employment and investment. Making labor markets more competitive can therefore increase economic activity. I use the opening of the Swiss labor market to French border commuters as a quasi-experiment to competition in the labor market. Preliminary results show that the reform increases workers’ transitions across firms within France. Firms become more capital intensive, and this is not because they lose more workers. Instead it suggests that the increased competition in the labor market spurred investment and labor market dynamism.