Migration and Firms’ Growth:

evidence from Spanish cities

Mercedes Teruel-Carrizosa

Agustí Segarra-Blasco

(very preliminary version)

Grup de Recerca d’Indústria i Territori

Universitat Rovira i Virgili

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Introduction

There has been a large immigration growth in Spain…

And also productivity staganation and moderation of wages…

How does migration inflows affect on firm performance?

In order to tackle with this problem…

SABI database (more than 40.000 firms)

Anuario económio de España (cities with more than 1.000 inhabitants)

Analysis of the effect immigrant inflows on Spanish manufacturing firms between 2001 and 2005.

Introduction

The population growth between 2001 and 2006 was 5.35%

But growth of immigrants was 211.15%. The percentage of immigrants in 2001 was 4.64% while in 2006 this percentage increased up to 13.12%.

Introduction

The population growth between 2001 and 2006 was 5.35%

But growth of immigrants was 211.15%. The percentage of immigrants in 2001 was 4.64% while in 2006 this percentage increased up to 13.12%.

Introduction

The aim of the paper…

Analysis of the effect of immigrant inflows on Spanish manufacturing firms between 2001 and 2005.

More specifically we analyse the performance in terms of:

Growth of employment

Growth of wages

Growth of labour productivity

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Theoretical framework

Different theoretical approaches to tackle with the phenomenon of migration

International inflows push and pull effects, hypothesis of enclaves and welfare magnets (Borjas, 1999; García and López, 2005)

Labour market effects at aggregated level skill composition effect, displacement effect or complementary effect on employment and the effect on wages (Borjas, 1994, 2003, 2006)

Theoretical framework

However, immigration has consequences on the labour market but it also in the city life-style

Labour market effects skill composition, displacement…

Urban effects Immigration generate negative and positive amenities

Multicultural, diverse environments, more open-minded inhabitants

Land price, congestion, congestion of public services, social tensions

Theoretical framework

Few studies approach to the effect of immigrants from an urban approach on firm performance.

Ottaviano and Peri (2005, 2006, 2008)

Here, we approach to the migration phenomenon from an urban reality affecting firm performance.

We wonder whether the arrival of immigrants affect at firm level and at city level.

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Database

Information at firm level obtained from firms registered in Mercantile Register (obtained through Sistema de Análisis de Balances Ibéricos)

Our sample contains 43,115 Spanish firms in manufacturing industries (CNAE-15 to CNAE-36) with 119,564 observations

Information at territorial level obtained from Anuario Económico de España (La Caixa)

It contains information of cities with more than 1,000 inhabitants.

DatabaseRegions with low share immigrants

All firms Young Firms Small Firms Export-Import Firms

Non export-import Firms

Number of firms 16908 5478 7266 2261 14647

Size (employees) 32.97

(87.90)

21.97

(76.39)

6.30

(1.68)

78.56

(176.48)

24.86

(55.94)

Gross Sales

(thousands euros)

5005.52

(27134.74)

3255.55

(21496.15)

612.17

(1296.96)

14914.45

(58940.43)

3242.51

(15122.79)

Value Added

(thousands euros)

1328.38

(5206.55)

850.10

(5004.53)

175.44

(576.87)

3696.52

(10993.65)

907.46

(3045.18)

Labour Productivity (thousands euros)

31.72

(58.89)

27.16

(19.99)

27.71

(86.66)

40.25

(30.94)

30.20

(62.44)

Wage

(thousands euros)

21.01

(8.31)

18.81

(7.60)

18.96

(7.99)

24.82

(9.02)

20.34

(7.99)

Regions with high share immigrants

Number of firms 26207 6877 11258 4962 21245

Size (employees) 35.89

(163.34)

22.15

(94.18)

6.36

(1.69)

73.49

(314.36)

25.97

(84.65)

Gross Sales

(thousands euros)

6616.37

(68571.62)

3504.84

(30415.4)

631.20

(872.02)

16766.37

(134447.2)

3809.78

(33701.01)

Value Added

(thousands euros)

1653.24

(10828.74)

888.16

(5810.10)

189.45

(150.45)

3894.04

(20705.89)

1061.67

(5776.05)

Labour Productivity (thousands euros)

34.06

(25.60)

28.95

(19.47)

29.74

(21.55)

42.15

(31.37)

31.93

(20.56)

Wage

(thousands euros)

25.43

(9.21)

20.84

(8.70)

21.57

(9.17)

26.82

(10.13)

22.54

(8.74)

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Results

Panel data with fixed effects and also estimations with instrumental variables to control for endogeneity

tititititi

tititi

umigDensAgeS

EEgrowthE

,,4,,21,1

1,,,

Im3)ln(ln

lnln

tititititi

tititi

umigDensAgeS

WWgrowthW

,,4,3,21,1

1,,,

Im)ln(ln

lnln

tititititi

tititi

umigDensAgeS

LPLPgrowthLP

,,4,3,21,1

1,,,

Im)ln(ln

lnln

Employment growth

Wage growth

Labour productivity

Results

Internal variables and territorial variablesWorkers, wage and productivity regressions. Whole database. GLS fixed effects

estimations.

Workers Wage Productivity

ln(Si,t) -0.8010

(0.0029)*

0.1457

(0.0023)*

0.1950

(0.0044)*

ln(Agei,t) 0.0689

(0.0048)*

-0.0927

(0.0038)*

-0.1439

(0.0071)*

Densityi,t -0.0745

(0.0116)*

0.0135

(0.0091)

-0.0225

(0.0173)

Immigration Ratei,t -0.1107

(0.0568)***

0.0337

(0.0447)

0.1818

(0.0848)**

Constant 2.2588

(0.0253)

-0.1919

(0.0199)*

-0.1744

(0.0378)*

R2 0.5086 0.0512 0.0270

Wald test 19,776.40 1,031.03 530.70

Hausman test 64,229.87 3,625.03 1,705.28

Firms 43,115

Observations 119,564

Dependent variable: yearly change in logarithm.

* Significant at 1%, ** significant at 5%, *** significant at 10%

Results

Controlling for endogeneity bias (Instrumental variables estimation)

Workers, wage and labour productivity regressions. IV estimation, GMM.

Workers Wage Productivity

Second stage

ln(Si,t) -0.0445

(0.0011)*

0.0100

(0.0004)*

0.0153

(0.0009)*

ln(Agei,t) -0.0457

(0.0014)*

-0.0089

(0.0006)*

-0.0119

(0.0013)*

Densityi,t -0.0037

(0.0023)**

-0.0028

(0.0012)**

-0.0066

(0.0025)*

Immigration Ratei,t -0.1605

(0.0388)*

0.0621

(0.0210)*

0.0174

(0.0445)

Constant 0.2814

(0.0045)*

0.0111

(0.0019)*

-0.0278

(0.0041)*

R2 0.0670 0.0047 0.0028

Wald chi2 3,879.59 677.94 285.54

Results

The impact of immigration of employment, wage and labour productivity growth

Workers Wage Productivity

Whole database -0.1107

(0.0568)***

0.0337

(0.0447)

0.1818

(0.0848)**

Small firms -0.3228

(0.0884)*

0.3160

(0.1008)*

0.4667

(0.1842)**

Young firms 0.2506

(0.2340)

0.9729

(0.1967)*

1.0365

(0.3769)*

Foreign-market oriented firms

-0.0619

(0.0635)

-0.2872

(0.1312)

0.1021

(0.0510)**

Non-foreign-market oriented firms

-0.1948

(0.0935)**

0.2266

(0.0943)**

0.1439

(0.2007)

Results

Empirical findings:

Cities with high immigration share have a negative impact on employment growth, a positive impact on wages growth and a positive impact on labour productivity growth

Small and young firms are more sensitive

Those foreign-market oriented firms are less sensitive

Cities with a high share of immigrants are so attractive for those firms intensive on labour or scale economies… it will be for those intensive in skilled workers.

Outline

Introduction

Theoretical framework

Database

Results

Conclusions

Conclusions

High immigration and territorially concentrated

New approaches to tackle with this phenomenon

Each firm locates in the best urban environment given its characteristics, it and adapts to the reality of urban amenities

Our empirical findings show that cities with a high share of immigration do not affect negatively to firm behaviour in terms of wage and productivity growth.

Conclusions

Contributions:

i) few analysis from an urban approach to tackle with the effect of immigration on firm growth

ii) the approach is at firm level (wide sample of Spanish manufacturing firms)

Main conclusion:

Immigration is a complex phenomenom… immigrants are not so unskilled as we think and their impact is not so negative…

Researchers must tackle with the problem from different approaches.

Outline

Many thanks!!!!

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