The Labor Market Effects of opening the border: Evidence from Switzerland

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Date and Time: 
Monday, October 17, 2016
2:00 pm – 3:30 pm
Speaker: 
Abstract: 

Between 1999 and 2007 Switzerland opened the labor market of its border region (BR) to cross-border workers (CBW), who constituted a large part of the migrants in the area near the border with the EU. A mobility agreement with the EU signed in 1999 culminated in the full opening of the border region for these workers in 2004. In this paper, we exploit the timing of this policy and the fact that these workers only worked in areas very close to the Swiss border to estimate the effect on the increase in the labor supply from CBW in the border region of Switzerland and potential effects on native labor market outcomes. We find that opening the border to CBW increased
their presence within a 12 minutes commute from the border by 5 percent of employment by 2010 with no significant change of their skill composition. This inflow had a positive effect on wages of highly educated Swiss workers and no effect on wages of other workers. The  main channel of adjustment for natives were transition towards managerial jobs and increased flows into public jobs.