Immigration and unemployment. Do natives get it right?

Abstract

We analyse whether natives correctly assess the effects of immigration on their own labour market opportunities. We relate self-reported job loss and job finding probabilities to the presence of foreign-born residents in a native’s neighbourhood. We interpret coefficient estimates through the lens of a learning model that allows us to disentangle the true effect of immigration from the perception bias. Our results show that natives greatly overestimate the effects of immigrants on their likelihood of losing the current job against the lack of significant true effects; job seekers’ perceptions are instead broadly unaffected, a largely correct assessment given the failure to detect significant true effects. Overestimation of the adverse effects of immigration on separation rates is concentrated among females, the low educated, the youths, the residents of smaller towns and employees on permanent contracts; the complementary groups appear to correctly assess that immigration has at best only modest effects. We briefly discuss the implications of these findings for the interpretation of empirical work on the labour market effects of immigration.