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  5. The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland

The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland

Abstract

We study a reform that granted European cross-border workers free access to the Swiss labor market and had a stronger effect on regions close to the border. The greater availability of cross-border workers increased foreign employment substantially. Although many crossborder workers were highly educated, wages of highly educated natives increased. The reason is a simultaneous increase in labor demand: the reform increased the size, productivity, and innovation performance of skill-intensive incumbent firms and attracted new firms, creating opportunities for natives to pursue managerial jobs. These effects are mainly driven by firms that reported skill shortages before the reform.

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