Do Firms Follow Immigrants? Empirical Evidence From Italy

This paper investigates the relationship between immigration and firms for Italy at NUTS 3 level, during the period 2012–2015. The main contribution to the existing literature is to provide results disaggregated at the sectoral level, taking into account the important heterogeneities existing across both provinces and sectors. At the aggregate level, the main result is the positive effect of immigrants on both the number of local units and employees. The analysis on employees by citizenship suggests that there are no displacement effects of immigrants relative to both Italian and foreign employees. When moving to the sectoral perspective, the results display a highly heterogeneous picture. However, sectors showing a statistically robust link for both establishments and employees sum up to 52 per cent of total value added and 48 per cent of total employment, while for five out of 19 sectors, immigrants do not exert any impact, neither in terms of local units nor employment. Immigrants can represent an attractive opportunity for firms to expand their economic activity by either opening new establishments or relocating the existing ones in those areas with rising immigrants’ population shares.