The impact of immigration on the French labor market: Why so different?

• We study how immigration impacts the labor market outcomes of natives in France.
• We find evidence of imperfect substitutability between natives and immigrants.
• A 10 p.p. increase in the immigrant share raises natives' wages by 3.3%.
• We observe a reallocation of natives to better-paid occupations.
• Natives tend to perform more abstract tasks when there are more immigrants.

Combining large (up to 25%) extracts of five French censuses and data from Labor Force Surveys for 1968–1999, we use Borjas' (2003) factor proportions methodology for France and find that a 10 p.p. increase in the immigrant share raises natives' wages by 3.3%, which is in stark contrast with the results in Borjas (2003) for the U.S. The positive impact of immigration on natives' wages and employment is shown to hold also at the regional level. We find evidence that this positive correlation partly comes from the imperfect substitutability of natives and immigrants within education/experience cells. Specifically, (i) the occupational distribution of natives and immigrants within these cells is more dissimilar when there are more immigrants in the cell; (ii) natives tend to perform more abstract tasks when there are more immigrants in the cell; and (iii) an important part of the positive relation between immigration and wages comes from a reallocation of natives to better-paid occupations within the cells. However, we argue that this positive correlation is also likely to be related to the inability of the Borjas (2003) model to perfectly account for the important changes in the wage distribution and the educational level characterizing the French economy in this period.