The Effect of Immigration on Natives’ Earnings in Finland

Using a shift-share instrument, I study inflows of foreign-background immigrants to Finland and estimate how immigration affects natives’ earnings at various points of the income distribution. My point estimates for the earnings effects of immigration are negative and statistically significant for natives below the 40th earnings percentile, near zero for those between the 40th and 55th percentiles, and positive and statistically significant for those in and above the 60th percentile. Notably, the intensity of the estimated effects tends to increase further away from the median. These results indicate that immigrants are closer substitutes for low-skilled Finns and more complementary to high-skilled native workers.