Employment effects of immigration in Austria

Abstract This paper examines how the rapid increase in immigrant workers following the EU enlargements affected employment growth in Austria between 2008 and 2017. Using a shift-share instrument based on historical settlement patterns and rich administrative data, I estimate local employment responses to immigration-induced labour supply shocks over short and longer horizons. I provide robust evidence that native employment rates respond positively to local immigration shocks, with elasticities of around 0.1 percent. Heterogeneity analysis suggests that short-run employment losses are concentrated among men with vocational or upper-secondary education, while women, especially those with higher education, experience employment gains that largely offset aggregate effects. For immigrants residing in Austria for more than seven years or naturalised, mainly from Turkey or the former Yugoslavia, inflows from new EU member states reduced employment growth by about 0.1 percent in the short run. Allowing for dynamic adjustment to earlier immigration shocks, both positive and negative employment responses appear short-lived and are gradually offset through adjustment and reallocation channels. These findings suggest that immigration did not harm domestic employment overall but affected subgroups differently, highlighting the need for targeted labour market support.