Trade, Migration and Integration – Evidence and Policy Implications

We use individual survey data providing detailed information on stress, technology adoption, and work, worker, and employer characteristics, in combination with recent measures of AI and robot exposure, to investigate how new technologies affect worker stress. We find a persistent negative relationship, suggesting that AI and robots could reduce the stress level of workers. We furthermore provide evidence on potential mechanisms to explain our findings. Overall, the results provide suggestive evidence of modern technologies changing the way we perform our work in a way that reduces stress and work pressure.

Offshoring continues to be an important dimension of firms’ internationalization choices. However, offshoring also increases contract enforcement costs by inhibiting the coordination and monitoring of performance. Immigrant employees may reduce such costs through their specific knowledge of the employer, their country of birth and access to foreign networks. In this paper, we investigate the role of immigrant employees within firms on firm offshoring, employing rich administrative Swedish microlevel data that include specific information about the characteristics of employees, manufacturing firms and their bilateral offshoring. Our results support the hypothesis that immigrant employees increase offshoring by lowering contract enforcement costs. Hiring one additional immigrant employee is linked to a relatively larger increase in offshoring at the intensive than the extensive margin, on average. The association to offshoring is considerably stronger for skilled immigrant employees and for contract and R&D intensive offshoring. Instrumental variable estimations demonstrate qualitatively similar results, while a placebo test with randomized immigrant employment does not generate any link between immigrants and offshoring.

What are the distributional consequences of migration, and how do they affect attitudes toward migration? In this paper we leverage a natural experiment generated by the ousting of former Libyan dictator Muammar Gaddafi, which created an unprecedented influx of economic migrants from African countries to Europe. This surge of low-skilled labor benefited low-productivity firms by lowering their production costs and expanding their labor supply. Employing a triple difference-in-differences design, we document that attitudes toward migration became more positive in Western European regions with large shares of migrants and low-productivity firms. Evidence from Sweden, which provides finely grained geographical data, confirms these findings. We then test the economic microfoundations of this attitudinal shift. We show that the surge in the supply of low-skilled labor increased the profitability of low-productivity firms more in areas that experienced larger migration flows. We find no evidence that migration worsened natives’ labor market conditions.