Migration and Firms’ Growth: evidence from Spanish cities Mercedes Teruel-Carrizosa

1. 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

2. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

3. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

4. 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.

5. 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%.

6. 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%.

7. 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

8. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

9. 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)

10. 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

11. 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.

12. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

13. 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.

14. Database

15. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

16. Results  Panel data with fixed effects and also estimations with instrumental variables to control for endogeneity Employment growth Wage growth Labour productivity

17. Results  Internal variables and territorial variables

18. Results  Controlling for endogeneity bias (Instrumental variables estimation)

19. Results  The impact of immigration of employment, wage and labour productivity growth

20. 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.

21. Outline • Introduction • Theoretical framework • Database • Results • Conclusions

22. 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.

23. 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.

24. Outline • Many thanks!!!! • Comments are wellcome