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In this paper [the authors] analyze the response of career, employment and wage of native Europeans to immigration. [The authors] then ask how individual country's policies affect these responses. [The authors] use data on 11 [European Union] EU countries, over the period 1995-2001. [The authors] also use the 1991 distribution of immigrants by nationality across European labor markets to construct a version of the enclave-based instrument to proxy for the flow of immigrants, that is exogenous to local demand shocks. [The authors] find that native Europeans are more likely to upgrade to more skilled and better paid occupations, when a larger number of immigrants enter their labor market. [The authors] find no evidence of an increased likelihood of non-employment or geographical mobility. [The authors] find that more flexible labor markets in a country are a key factor to have employment upgrading in response to immigration.

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In this paper we use a dataset that follows a representative sample of native Europeans, resident of 11 countries, over the period 1995-2001, in order to identify the effect of inflows of immigrants on their career, employment, location and wage. We use the 1991 distribution of immigrants by nationality across European labor markets to construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We also control for a series of fixed effects that absorb individual, country-year and sector-year effects. We find that native Europeans are more likely to upgrade their occupation to one associated with higher skills and better pay, when a larger number of immigrants enter their labor market. They are also more likely to start a self-employment activity. As a consequence of this upward mobility their income increases or stays the same in response to immigration. We find no evidence of an increased likelihood to leave employment or to leave their region of residence. These effects take place within two years and some persist over four years. Hence it appears that immigrants push native European workers on a faster career track rather than reducing their employment opportunities.

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