From Mette Foged and Giovanni Peri:
This paper makes progress on a long standing issue: what is the effect of unskilled immigrants on the labor market outcomes of similarly educated natives? Using the universe of individuals and firms in Denmark for the period 1991-2008 we follow natives over time tracking how their wage, employment and occupational choice responded to a large, exogenous inflow of immigrants. We focus on a largely unexplored inflow of non-European (EU) immigrants to Denmark, beginning in 1995 and driven by a sequence of international political crises, the Bosnian, Somalian and Iraqi one and economic crises, the Turkey depression of 1994-95. We find that the increased supply of non-EU immigrants in a Danish municipality pushed the less educated native workers to pursue more complex and less manual-intensive occupations. This reallocation took place mainly through movement of individuals across firms and resulted in higher or unchanged wages. Immigration increased mobility of natives across firms but it did not increase their probability of unemployment.