A foreigner who doesn t steal my job: The role of unemployment risk and values in attitudes towards foreigners

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1 Marco Pecoraro and Dder Ruedn A foregner who doesn t steal my job: The role of unemployment rsk and values n atttudes towards foregners Lausanne, July 2013 FORS Workng Papers

2 FORS Workng Paper seres The FORS Workng Paper seres presents fndngs related to survey research, focusng on methodologcal aspects of survey research or substantve research. Manuscrpts submtted are papers that represent work-n-progress. Ths seres s ntended to provde an early and relatvely fast means of publcaton pror to further development of the work. A revsed verson mght be requested from the author drectly. Further nformaton on the FORS Workng Paper Seres can be found on Copyrght and Reserved Rghts The copyrght of the papers wll reman wth the author(s). Formal errors and opnons expressed n the paper are the responsblty of the authors. Authors accept that the FORS reserves the rght to publsh and dstrbute ther artcle as an onlne publcaton. FORS may use the researcher s name and bographcal nformaton n connecton wth the advertsng and promoton of the work. For any comment, suggeston or queston on these gudelnes, please do not hestate to contact us (paperseres@fors.unl.ch). Edtoral Board Peter Farago Bran Klener Olver Lpps Georg Lutz Isabelle Renschler Valére-Anne Ryser Marlène Sapn Robn Tllmann Mchèle Ernst Staehl Bors Wernl Carmen Borrat-Besson Responsble edtor: Mareke Voorpostel How to cte ths document: Pecoraro, M. & Ruedn, D. (2013). A foregner who doesn t steal my job: The role of unemployment rsk and values n atttudes towards foregners. FORS Workng Paper Seres, paper Lausanne: FORS. Acknowledgements The research leadng to these results has receved fundng from the Swss Natonal Scence Foundaton under grant agreement number Ths study benefted from comments by Antono Fdalgo, Etenne Pguet, partcpants of the conference Increasng Heterogenety n the Workforce and ts Impact n Nuremberg (Germany) and the 7 th Internatonal Conference of Panel Data Users n Swtzerland n Lausanne. Author contrbutons: DR and MP desgned research; MP performed research; MP and DR wrote the paper. ISSN x (onlne) FORS c/o Unversty of Lausanne, Géopols 1015 Lausanne Swtzerland E-mal: paperseres@fors.unl.ch 2013 Marco Pecoraro & Dder Ruedn 1

3 Summary Over the past three decades, mmgraton has become systematcally poltczed by partes on the rght, and opposed by many ndvduals n socety. Dfferent hypotheses have been proposed to explan varaton n the opposton to mmgraton among the populaton. Economc arguments hghlght the competton between natve workers and mmgrants over lmted resources. Socologcal arguments underlne addtonal factors lke values and belefs. Usng cross-sectonal data from the Swss Household Panel 1999, we account for non-lnearty n educatonal attanment, and consder relatve rsk to unemployment and how these two varables nteract. We examne ndvdual atttudes towards equal opportuntes for foregners and Swss ctzens. Here we show that ndvduals wth low levels of educaton tend to oppose equal opportuntes for foregners, whle for ndvduals wth hgh levels of educaton such opposton can be observed wth ncreasng unemployment rsk. Our analyss demonstrates that values and belefs can account for the negatve atttudes of ndvduals wth low levels of educaton. The assocaton wth unemployment rsk for ndvduals wth hgh levels of educaton, by contrast, s robust to ths control for values and belefs. It becomes clear that atttudes towards equal opportuntes for mmgrants are not a smple reacton to changes n the demographc composton of the labour force. Both values and economc factors play a central role. Keywords: Immgraton, atttudes towards foregners, labour market competton, unemployment rsk, values and belefs 2

4 A foregner who doesn t steal my job: The role of unemployment rsk and values n atttudes towards foregners Marco Pecoraro 1 & Dder Ruedn 2 1. Introducton Over the past three decades, mmgraton has become one of the most promnent topcs n electon campagns, systematcally poltczed by partes on the rght. Across Western Europe, there appears to be growng support for ant-mmgrant polces and organzatons assocated wth ant-mmgrant sentments. The most common and perhaps most basc explanaton for atttudes towards foregners revolves around the dea of economc competton. Followng ths approach, negatve atttudes towards foregners and mmgrants are seen as a drect reacton aganst unwanted competton n the labour market. Despte a growng lterature on the atttudes of the manstream socety towards foregners and mmgrants, the exact role of educaton remans poorly understood. Whle an assocaton between low levels of educaton and negatve sentments towards mmgrants can be found across countres, the underlyng mechansm remans poorly specfed. In ths artcle, we assess to whch extent the labour market competton hypothess s relevant n shapng atttudes towards foregn ctzens n Swtzerland. We focus on Swtzerland for varous reasons: Wth more than a ffth of the populaton beng foregn ctzens, and a concentraton of mmgrants n both low-sklled and hgh-sklled occupatons, Swtzerland offers an deal case to ncrease our understandng of the role of educaton n atttudes towards mmgrants. The hgh level of economc prosperty would lead us to expect low levels of grevances aganst foregners, but Swtzerland has seen the electoral success of the rght-wng Swss People s Party a party drawng heavly on a rhetorc that depcts mmgraton as a negatve nfluence on Swss ctzens. In ths rhetorc, t s taken for granted that more mmgraton leads to wage dumpng and job dsplacement through ncreased competton n the labour market among natve workers. Most studes on ndvdual atttudes towards mmgrants draw on compettve threat theory, mplctly assumng or acceptng that ndvduals are fundamentally largely selfnterested. The basc premse s that atttudes are negatve towards mmgrants 1 Unversty of Neuchâtel, marco.pecoraro@unne.ch 2 Unversty of Neuchâtel, Dder.ruedn@wolfson.oxon.org 3

5 because mmgrants are unwanted compettors (Borjas, 2011). Compettve threat theory can be consdered the staple n research on atttudes to mmgrants (Ceobanu and Escandell, 2010), probably because t s a theory that allows the formulaton of clear hypotheses (Coenders and Scheepers, 1998). Whlst there s some emprcal support for the basc premse of economc competton (e.g. Scheve and Slaughter, 2001; Mayda, 2006; Ortega and Polaveja, 2012), both economsts and socologsts have refned the argument. In partcular, non-economc explanatons have been formulated, such as the role of denttes or values and belefs (e.g. Hanmueller and Hscox, 2007; Sdes and Ctrn, 2007; Mueller and Ta, 2010). Accordng to ths strand of the lterature, the labour market channel plays a less sgnfcant role n shapng atttudes towards mmgraton when values and belefs are accounted for. In contrast, Facchn et al. (2013) argue that economc and non-economc determnants play a complementary role n explanng atttudes towards mmgraton. Prevous lterature reveals two sgnfcant shortcomngs. Frst, exstng studes assume that the mmgrants n a recevng country are ether predomnantly unsklled or predomnantly sklled. For most countres, ths means that the mmgrant populaton s regarded as lower sklled than the natve populaton. Accordngly, only low-sklled ndvduals of the natve populaton are exposed to competton from mmgraton. By so dong, however, these studes gnore the fact that the skll dstrbuton of mmgraton tends to be somewhat bmodal, wth peaks at both the hgh-skll and low-skll ends of the dstrbuton (e.g. Borjas et al., 1997; Kahn, 2004; Felbermayr and Kohler, 2007). Ths means that hghly sklled workers are also exposed to competton from mmgrants, wth correspondng mplcatons on atttudes towards mmgraton. Second, most studes equate educaton wth sklls (Malhotra et al., 2013). As stressed by Ortega and Polaveja (2012), however, defnng sklls solely n terms of educatonal attanment consttutes a very narrow defnton of the human-captal resources that characterze natve-foregner competton n the labour market. It follows that these studes provde an ncomplete test for the labour-market competton hypothess. For a better understandng of the role of educaton, we assess the relevance of the labour market competton hypothess n explanng ndvdual atttudes towards equal opportuntes for foregn and Swss ctzens. To fulfl ths objectve, n a frst step we examne to what extent educaton and labour-market sklls correspond, rather than makng the assumpton that they largely correspond. We control for non-economc factors such as opnons on Swss tradton and trust n organsatons for the defence of human rghts to further establsh f atttudnal effects of educaton are not drven by values and belefs. These varables tend to correlate wth levels of educaton, and may ndeed reflect dfferent propenstes to control prejudce (Blnder et al., 2013). To check the robustness of our results, sklls are defned not only n terms of educatonal attanment but also n terms of occupatonal level. In the emprcal analyss, we thus mprove on most exstng studes n two mportant aspects. Frst, we account for nonlnearty n educatonal attanment, to account for the fact that foregners are overrepresented at both the bottom and the top of the educaton dstrbuton. Second, whle labour market competton s commonly operatonalzed by educaton, we addtonally allow for nteracton between educaton and rsk of unemployment n order to better assess exposure to competton from foregners. Ths means we crcumvent the 4

6 assumpton that only workers n low-sklled occupatons are exposed to economc pressure from mmgrants. Usng these more sophstcated measures of exposure to market competton, we fnd no evdence that once values and belefs are accounted for workers wth low levels of educaton hold a pror negatve atttudes towards foregners. Ths fndng contrasts wth most pror research. Moreover, we show that even f workers wth a tertary educaton robustly appear to have more postve atttudes towards foregners than ther counterparts wth an upper secondary educaton, a hgher rsk of unemployment s found to be negatvely assocated wth postve atttudes towards foregners only among the hghly educated. 2. Swss mmgraton polcy and labour market As n many Western European countres, the post-war perod n Swtzerland was characterzed by strong economc growth and the gradual lberalzaton of nternatonal trade. Immgraton polcy served as a useful macroeconomc nstrument allowng the pro-cyclcal explotaton of a low-sklled foregn labour force n order to meet the demands of the economy. Ths guest-worker mmgraton was characterzed by state control and corporatst agreements, and ntally both settlement and contact wth the ndgenous populaton was actvely dscouraged. Followng pressure from the publc and nternatonal organzatons, as well as competton from other Western European countres offerng a better deal for labour mgrants, ths approach changed durng the 1960s towards a model of mmgraton (Skenderovc and D Amato, 2008). As elsewhere, the poltcal debate on mmgraton came to be domnated by two opposng movements: one sde hghlghted economc growth, the other sde voced concerns of overpopulaton, wage dumpng, and a threat to local culture. The German concept of Überfremdung combnes these concerns, wth concurrent connotatons of there beng too many mmgrants and mmgrants that are too foregn. 5

7 Fgure 1: newspaper adverts of the Swss People s Party hghlghtng the purported mpact of mmgraton on local wages and jobs, gven both n French (left) and German (rght). That s enough! Stop mass mmgraton. To ensure that your salary does not drop and you do not lose your job! The pcture was alleged to connote an nvason by Naz-Germans (Honegger, 2011) The Swss People s party (UDC/SVP) s the man actor for moblzng ant- mmgrant sentments n Swtzerland, takng up an ssue about whch a large part of the populaton s concerned (Ruedn, 2012). Between 1987 and 2007, the natonal vote share of ths conservatve party n parlament has ncreased from 11 per cent to 29 per cent. 3 Durng the same perod, there were over 20 referendums and popular ntatves on mmgraton-related topcs. Untl recently, most attempts to ntroduce a more restrctve mmgraton regme usng drect democratc means were defeated at the polls, such as n 2000 when voters rejected an ntatve to lmt the number of foregn ctzens to 18 per cent. More recently, however, a ban on the buldng of new mnarets was ntroduced n Swtzerland usng a popular ntatve (n 2009), or a law on the automatc expulson of foregners gulty of crmes s awatng enactment. The newspaper adverts n Fgure 1 are recent examples of propaganda from the Swss People s party accordng to whch mmgraton nduces wage dumpng and job dsplacement. Whlst there appears to be growng support for ant-mmgrant polces and organzatons assocated wth ant-mmgrant sentments n some way, t s not the case that all Swss voters have become more hostle to mmgrants. Snce the 1990s, Swss polcy ncreasngly favoured European mmgrants and ntroduced restrctve polces for so-called thrd-country natonals: mmgrants from outsde the European Unon and the European Economc Area (EEA). Wth asylum seekers and famly reunon, mmgrant categores beyond labour mmgraton ganed promnence, but the Swss economy contnued to struggle wth a shortage of qualfed labour (e.g. Huth, 2004; Zmmerl et al., 2009; Schellenbauer et al., 2010). Gradually 3 The party s growth seems to have slowed, and n the most recent natonal electon n 2011, t was unable to ncrease ts vote share, although t remans the largest party n parlament wth 27 per cent of the vote. 6

8 workng towards free moblty wth EU/EEA countres, Swss employers were advsed to fll ther needs wth mgrants from Western European countres snce 1991 and partcularly snce It remans possble to recrut sklled workers from outsde the EU/EEA, but quotas are n place. Non-European workers are only admtted f no Swss or European worker can be recruted to fll the vacant job. 4 As a result of ths focus on EU/EEA mmgrants, the nature of mgraton flows has evolved from a manly loweducated labour force to one favourng hghly qualfed labour (Pecoraro, 2005). Fgure 2 llustrates the result of ths change n the nature of mgraton flows to Swtzerland. It shows the dstrbuton of educatonal attanment across the workng-age populaton by dfferent natonal groups (Swss natonals, all foregners, and foregners settled n Swtzerland wthn the prevous fve years). In the top panel, the hghest fracton of workers wth the lowest levels of educaton s found among foregn resdents. On the one hand, ths s a legacy of mmgrant recrutment before the 1990s, where manual workers were actvely sought. On the other hand, we note that recent mmgrants are slghtly more common n ths category than Swss ctzens. Ths reflects the fact that the prortzng of European mmgraton contnues to attract mmgrants wth low levels of educaton mostly from Italy and Portugal. The mddle panel ncludes workers wth upper secondary educaton, whose proporton s domnant among Swss workers (around 60 per cent of Swss workers fall nto ths category). By contrast, the proporton of tertary-educated workers among recent foregners clearly exceeds those among other groups n the bottom panel. Put dfferently, we observe a clear bpolarty n terms of educatonal attanment among foregners. Ths concentraton of mmgrants at the hgh and low end reflects labour market shortages, and has not changed substantvely n the decade under observaton. The mmgraton polces n place seem successful n counteractng these shortages by means of mmgraton. Hstorcally, ths frst meant a focus on low-sklled labour, and snce the 1990s a focus on mmgraton of hgh-sklled labour. Immgraton for other reasons than work (notably famly reunfcaton or asylum) along wth contnued mmgraton from countres lke Italy and Portugal ensure a supply of low-sklled labour. 4 There are some exceptons wth regard to ntra-frm transfer and famly reunfcaton. Untl 2004, prorty was gven to Swss workers over EU-15/EFTA workers, but these restrctons have been removed. 7

9 Fgure 2: Levels of educaton by natonal group, 1999 to 2009 Source: Swss Labour Force Survey Notes: Indvduals aged 18-65; recent foregners are those resdng n Swtzerland for less than 5 years. The ncreased focus on mmgrants from European countres, however, dd not abate concerns about mmgraton among the populaton. Immgraton s consstently among 8

10 the most mentoned most mportant problems n opnon surveys (Bornscher, 2010), and the contnung success of the Swss People s Party can be understood as an ndcaton governmental polcy does not suffcently address concerns over mmgraton. 3. Atttudes towards mmgraton Ant-mmgrant sentments may be abound n Western Europe, but t s not the case that everyone shares negatve feelngs towards foregners. A common explanaton s that ndvduals who drectly compete aganst mmgrants n the labour market are more lkely to oppose mmgrants. The Heckscher-Ohln approach predcts that mmgrants pressure the wages of smlarly sklled natves natonwde (Scheve and Slaughter, 2001, p.133). It suggests that mmgraton leads to lower wages for natve workers whose sklls are substtuted by mmgrants (.e. a negatve wage effect). At the same tme, wages are expected to ncrease for natve workers wth complementary sklls to the mmgrants (.e. postve wage effect). It follows that f mmgraton ncreases the supply of unsklled labour relatve to sklled labour, then the wages of sklled ndvduals are expected to rse, and the wages of unsklled ndvduals are expected to fall. The expectaton s the opposte f mmgrants are predomnantly more sklled than the natve workers. The mplcaton on atttudes towards mmgrants s that natve workers who are more exposed to competton from mmgrants are expected to have more negatve atttudes, because t s n ther ratonal self-nterest to protect ther wages. Emprcal research has generally supported ths hypothess, n partcular that the relatve skll composton of natves to mmgrants n the recevng country determnes the sgn of correlatons between educaton/sklls and atttudes to mmgraton. In the US context, where t s often posted that hghly sklled labour s the abundant factor and thus mmgrants are less sklled than natves on average, ndvduals wth lower levels of educaton are more lkely to be aganst mmgraton (e.g. Espenshade and Hempstead, 1996; Scheve and Slaughter, 2001; Kessler, 2001). Low levels of educaton are also a consstent factor for studes coverng Europe (e.g. Dülmer and Klen, 2005; Schneder, 2008; Ceobanu and Escandell, 2010). On the bass of crosscountry survey data, Mayda (2006) and O Rourke and Snnott (2006) have confrmed ths result. Moreover, they have shown that n countres where natve workers are generally less sklled than mmgrants such as n the Phlppnes, natves wth lower levels of educaton tend to favour mmgraton. Usng a more comprehensve measure of sklls, Ortega and Polaveja (2012) have also provded support for the labour market competton hypothess accordng to whch ndvduals employed n jobs less exposed to competton from mmgrants are relatvely more n favour of mmgraton. Only few studes reject the labour market competton hypothess outrght. For nstance, Hanmueller and Hscox (2007) have found that ndvduals wth hgher levels of educaton are more favourable to both sklled and unsklled mmgrants. Accordng to the authors, ths result stems from the fact that educaton s a proxy for values and belefs, suggestng that a dfferent mechansm may be domnant rather than compettve threat. Sdes and Ctrn (2007) emphasze a socal-psychologcal approach 9

11 to atttudes towards mmgraton, n whch the role of values and denttes outweghs the nfluence of materal concerns. Ther results show that cultural and natonal denttes matter more than economc concerns for opnon formaton. Malhotra et al. (2013) use a survey experment to underlne ths explanaton: cultural and economc threats are dfferent phenomena, and ndvduals react dfferently dependng on whch threat they perceve. They fnd lttle evdence for labour-market competton as drvng negatve atttudes towards foregners, but they only study a specfc sector. The few studes usng survey expermental settngs apart, most of the aforementoned studes have tred to handle the assocaton between educaton and values and belefs by estmatng specfcatons that account for ndcators of ndvdual values and belefs. Despte these addtonal controls often beng jontly sgnfcant, the relatonshp between educaton and atttudes towards foregners remans strong. Ths fndng suggests that the sgnfcant correlaton between educaton and atttudes towards mmgraton s not prmarly drven by dfferences n values and belefs, renforcng the relevance of the labour market competton hypothess. Few studes have examned the relatonshp between labour-market consderatons and ant-mmgraton atttudes n Swtzerland specfcally, the case under study n ths artcle. Ths relatve lack of studes s surprsng because a number of authors have used cross-country data from the European Socal Survey (ESS) or the World Value Survey (WVS), both of whch nclude Swtzerland. Few of these cross-natonal studes, however, have presented ther results per country or only for Swtzerland. Exceptons are the studes from Hanmueller and Hscox (2007) and Green et al. (2010). Whle Green et al. focus on how dversty n mmgraton nfluences atttudes across Swss muncpaltes drawng on contact theory and a perspectve of cultural threat, Hanmueller and Hscox have demonstrated that, contrary to predctons by the labour market competton hypothess, hgher levels of educaton mean greater support for all types of mmgraton (.e. both low- and hgh-sklled). To our knowledge, only Helblng (2011) has reled on data from a survey of Swss ctzens lvng n the cty of Zürch. Investgatng whether Swss- Germans perceve German mgrants as cultural and economc threats, Helblng clams to fnd support for the labour market competton hypothess, n partcular: negatve atttudes towards mmgrants from former Yugoslava (who are more lkely to have low levels of educaton) decrease wth Swss-Germans level of educaton but there s no sgnfcant relatonshp between the level of educaton and the Swss-Germans dslke of German mgrants. 4. Data We use data from the Swss Household Panel (SHP), a yearly panel followng a random sample of households and ther members n Swtzerland snce The SHP dataset provdes useful nformaton on varous aspects of professonal lfe as well as an ndcator on whether respondents are n favour of Swtzerland offerng foregners the same opportuntes as those offered to Swss ctzens, or whether they favour better opportuntes for Swss ctzens. Here we understand atttudes towards equal 10

12 opportuntes for foregners as a case of atttudes towards foregners more generally, and use the two terms nterchangeably. The emprcal analyss s based on the frst wave of the panel, used as a cross-secton. Accordngly, cross-sectonal ndvdual weghts are used to produce representatve estmates of the populaton n Swtzerland. 5 The sample sze n the frst wave of the SHP s the hghest, wth the smallest amount of mssng values. By choosng ths year, we can crcumvent complcatons assocated wth sample selecton and attrton. More mportantly, n 1999 the queston on equal opportuntes for foregners was asked n a more fne-graned way than n subsequent years. Whle the varable capturng atttudes towards equal opportuntes for foregners s avalable n all waves, t generally uses an ordered response wth three categores ( n favour of equal opportuntes for foregners (1), nether of them (2), n favour of better opportuntes for Swss ctzens (3)). In 1999, ndvduals respondng 1 or 3 were also asked whether they are rather n favour or strongly n favour. Ths allows us to code the response as an ordered response wth fve categores. Moreover, two mportant varables of ndvdual values and belefs are only avalable for 1999, namely opnons on Swss tradton and trust n organsatons for the defence of human rghts. Both varables correspond to concepts hghlghted by the relevant theory. Our sample conssts of Swss ctzens of votng age who are actve n the labour market, and we only keep respondents who reported vald nformaton for the varables of nterest (.e. atttudes towards foregners and rsk of unemployment). In order to check whether educaton reflects non-labour-market consderatons, we addtonally used sub-samples of ndvduals not n the labour force: both the total sub-sample and only the retrees.e. those aged 65 and older. Table 6 n the appendx gves further detals on the sample selecton procedure. 5. Methods To explan atttudes towards equal opportuntes for foregners, we estmate the followng baselne equatons broadly smlar to the specfcaton adopted n the lterature analysng the determnants of atttudes towards mmgraton: y * = αs S + X β + (1) y * = α1l1 +α3l3 + X β + (2) 5 The SHP dataset ncludes cross-sectonal weghts to adjust for non-response at the ndvdual and household level. See Graf (2009) for a detaled descrpton of the procedures mplemented for computng weghts n the SHP. Usng Stata s svy command, all regresson analyses ncorporate crosssectonal ndvdual weghts to take nto account the samplng desgn of the SHP and obtan relable estmates concernng the populaton of nterest. Stata calculates robust standard errors usng the lnearzaton varance estmator based on a frst order Taylor seres lnear approxmaton. 11

13 where the dependent varable y * s the unobserved latent varable for atttudes towards foregners, X s a vector of observed personal characterstcs, ncludng a dummy for gender, age, age squared, a bnary varable for father s and mother s natonal orgn respectvely. Two specfcatons are used: Equaton (1) ncorporates years of schoolng S, whle n equaton (2) years of schoolng are replaced by levels of schoolng L h (wth h {1, 2, 3}). Accordng to the second specfcaton, ndvduals wth prmary or lower secondary educaton (h=1) and ndvduals wth tertary educaton (h=3) are compared to those wth upper secondary educaton (h=2). Years and levels of schoolng are both derved from the hghest level of educaton acheved, consstng of 10 levels classfed n an ncreasng herarchcal order. Whle Table 7 n the appendx shows how each level of educaton s translated nto the total number of years of schoolng, 6 Table 8 n the appendx presents all explanatory varables ncluded n the regresson analyses, and descrptve sample statstcs are shown n Table 9 n the appendx. In order to account for the ordnal nature of the observed dependent varable y, we use ordered probt estmatons where covarates Normal 0,1. The contnuous latent varable y * can be thought of as the propensty to exhbt postve atttudes towards foregners. The observed response categores are ted to the latent varable as follows: y = Strongly n favour of better opportuntes for Swss ctzens Rather n favour of better opportuntes for Swss ctzens Nether of them Rather n favour of equal opportuntes for foregners Strongly n favour of equal opportuntes for foregners f y * f μ 1 f μ f μ 2 3 f μ μ 1 * < y < μ2 * < y < μ3 * < y < μ3 * < y Foregners recently settled n Swtzerland are over-represented at both the bottom and partcularly the top of the educaton dstrbuton (compare fgure 2). Followng labour market competton theory, we expect low- and hgh-educated Swss workers to be more opposed than those n the mddle category. Accordngly, we formulate the followng formal test of the labour market competton thess: ˆ 0 and ˆ Followng Flückger and Ramrez (2000) and de Coulon et al. (2003), a duraton of 7 years has been attrbuted to workers wth ncomplete compulsory school; n terms of levels of schoolng completed, these ndvduals have been ncluded among those wth prmary or lower secondary educaton (h=1). 12

14 As recognzed by an ncreasng number of scholars (e.g. Scheve and Slaughter, 2001; Hanmueller and Hscox, 2007), f educaton s hghly correlated wth ndvdual values and belefs, the relatonshp between the educatonal attrbutes of workers and ther atttudes towards foregners should have very lttle, f anythng, to do wth fears about labour market competton: ˆ 0 and ˆ Scheve and Slaughter (2001) propose two procedures to test whether educaton affects atttudes through non-economc factors. Frst, the baselne models are also estmated for the not-n-labour-force sub-sample; f the estmates assocated wth educaton delver the same concluson than those computed on the bass of the sample of workers, years or levels of schoolng are probably unsatsfactory measures of labour-market sklls. Another check conssts of extendng the baselne models to account for ndcators of ndvdual values and belefs such as opnons on Swss tradton and trust n organsatons for the defence of human rghts. In addton, we perform senstvty analyss n whch we replace levels of educaton by levels of occupaton usng the 1-dgt ISCO code condensed nto four categores, as dd Dumont and Monso (2007). y * ~ = α L +α~ ~ L +α~ ~ L3 + X β + ~ (3) ~ ~ where L 0 s a bnary varable for mssng values, L 1 s a bnary varable for jobs ~ demandng low sklls (=1 for ISCO category 9), L 2 s a bnary varable for jobs ~ demandng ntermedate sklls (=1 for ISCO categores 4 to 8) and L 3 s a bnary varable for jobs demandng hgh sklls (=1 for ISCO categores 1 to 3). We wll use separate models that nclude levels of educaton and levels of occupaton to drectly relate to the dfferent approaches common n the lterature. At the same tme, ths approach wll demonstrate the robustness of the results whch wll be mmedately apparent from the juxtaposed fgures and tables. In lne wth Ortega and Polaveja (2012), we furthermore rely on an extended model to understand how unemployment rsk nduces more exposure to labour market competton from foregners, whch can be expected to lead to negatve atttudes towards foregners. y * = α1l1 + α3l3 + γu + X β + (2 ) y * ~ = α L +α~ ~ L +α~ ~ L3 + γu + X β + ~ (3 ) where the self-assessed rsk of unemployment n the followng 12 months U, based on a scale from 0 ( no rsk at all ) to 10 ( a real rsk ), s added as an addtonal varable to the models n equatons (2) and (3). In order to nvestgate possble nteractons between unemployment rsk and educaton, we also estmate the model on three subsamples: () ndvduals wth (n)complete prmary or lower secondary level educaton, () those wth upper secondary level educaton, and () those wth tertary level 13

15 educaton. As an addtonal robustness check, we provde estmates by level of occupaton rather than educaton. It s mportant to keep n mnd that the rsk of unemployment s unlkely to be randomly determned; n other words, ths varable s probably endogenous n our equatons and thus correlated wth. Ignorng ths endogenety problem may lead to based estmates of the atttudnal effects assocated wth the rsk of unemployment. We test for endogenety of U usng a smlar verson of the two-step approach developed by Rvers and Vuong (1988). Followng Wooldrdge (2010), we run the OLS regresson U on our control varables and the varable unemployment occurrence n the last 12 months as an nstrument, 7 save the resduals, and run the ordered probt y on our control varables, U and the resduals from the frst step. The t statstc on the latter s a vald test of the null hypothess that U s exogenous. Our choce of nstrument s motvated by the well-documented scarrng effects of unemployment experence on subsequent employment outcomes (e.g. Arulampalam et al., 2000, 2001; Gangl, 2003). Accordngly, we expect a sgnfcant mpact of unemployment occurrences n the prevous year on the future rsk of unemployment at work. 6. Fndngs In a frst step, we examne the relatonshp between educaton and atttudes towards equal opportuntes for mmgrants. Ordered probt estmates from the baselne models are presented n Table 1. In lne wth pror research on the determnants of atttudes towards mmgraton, estmates from equaton (1) n the frst column show that the coeffcent assocated wth years of educaton s sgnfcantly postve; ths result s confrmed by estmates from equaton (2) n the second column. Workers wth low levels of educaton tend to exhbt ant-foregner atttudes ( ˆ1 0 ) whle those wth hgh levels of educaton tend to hold postve atttudes ( ˆ3 0 ). Most of the other estmates have the expected sgn, n partcular: havng a mother or a father of foregn orgn ncreases the propensty to exhbt postve atttudes towards foregners. The negatve relatonshp obtaned between educaton and ant-foregner atttudes may be attrbuted to the fact that ndvduals wth low levels of educaton are more lkely to be conservatve n the sense of greater tes to Swss tradton and lower trust n organsatons for the defence of human rghts (compare Kam, 2012; Hatem et al., 2011, for potental underlyng mechansms). When runnng the ordered probt regresson on the sub-sample of those out of the labour force, we get substantvely the same results as for the baselne models, regardless of whether the entre sub-sample or only retred people are consdered. Indeed, as shown n Table 2, all estmates assocated wth years of schoolng are sgnfcantly postve and those derved from 7 Based on ordnal values of the varable unemployment occurrence n the last 12 months, we construct the followng bnary varable: no occurrence (reference category) vs. once or several tmes. 14

16 equaton (2) provde the same pattern of results. Accordng to ths ntal set of checks, the educatonal varables seem to measure non-labour-market consderatons. In a second seres of check procedures, we control for ndvdual ndcators of values and belefs when estmatng the baselne models. F tests, reported n the last row of Table 3, ndcate that ther ncluson s jontly sgnfcant. 8 As presented n the fourth column of the same table, the coeffcent assocated wth years of educaton s stll sgnfcant when values and belefs are taken nto account. In contrast, when nonlnearty n educatonal attanment s consdered, the sgnfcant relatonshp between a low level of educaton and atttudes vanshes ( ˆ1 0 ), whle the coeffcent assocated wth a hgh level of educaton remans sgnfcantly postve. Replacng levels of schoolng wth levels of occupaton does not change the prevous statement, n partcular: only the category of workers n jobs demandng hgh sklls s assocated wth postve atttudes towards foregners, whether or not we control for values and belefs. All n all, these fndngs ndcate that the labour market competton hypothess s rejected snce the strong relatonshp between a low level of educaton and antforegner atttudes s manly due to the omsson of values and belefs. Ths fndng s n lne wth Malhotra et al. (2013) and ther lmted meta-analyss. The nsgnfcant atttudnal effects for the low-educated workers and those n low-sklled jobs are consstent wth results from recent studes on the wage mpact of mmgraton n Swtzerland (Gerfn and Kaser, 2010; Favre, 2011) showng no evdence for negatve wage effects n low-sklled occupatons. Favre argues that there s lttle room for downward adjustment of wages n low skll occupatons snce most of the latter are covered by collectve agreements ensurng mnmum wage protecton. Put dfferently, mmgraton flows to Swtzerland may smply not put natve workers under pressure. Wth respect to the remanng sgnfcant postve assocaton between a hgh level of educaton/sklls and postve atttudes, recall that our proxes only cover some aspects of relevant values and belefs. For nstance, workers wth hgher educaton may be more prone to have frends from dfferent countres, a characterstc that we are not able to capture on the bass of our data. We are also unable to capture the tendency to control prejudce (Blnder et al., 2013), whch s more prevalent among those wth hgher levels of educaton. On the other hand, t could ndeed be n the nterest of sklled natves to ensure equal access for legally admtted mgrants to the labour market more generally. Recent research has stressed the role of sklled mgraton n 8 As noted by Hanmueller and Hscox (2007) and Ortega and Polaveja (2012) among others, the ndcators of ndvdual values and belefs mght be endogenous, n the sense that the relatonshp between the values/belefs and educaton may result from concerns about labour market competton. To deal wth ths ssue, we follow the procedure suggested by Hanmueller and Hscox whch conssts of estmatng levels of (a) trust n organsatons for the defence of human rghts, and (b) attachment to Swss tradton usng educaton as a predctor. If the ndcators of ndvdual values and belefs are endogenous to labour market concerns, the relatonshp between these ndcators and educaton should be sgnfcant among ndvduals n the labour force, but not sgnfcant among those out of the labour force. Table 12 n the appendx presents sgnfcant estmates of the same sgn for the educaton varable among both subsamples, meanng that the assocaton between values and educaton s not drven by labour market concerns. The same concluson follows when educaton s replaced by occupaton. 15

17 generatng benefts for destnaton countres (e.g. Chswck, 1999; Hunt and Gauther- Loselle, 2010; Kerr and Lncoln, 2010; Stuen et al., 2012). Ths s partcularly relevant n the Swss case where some professonal felds are regularly experencng a shortage of qualfed labour, despte ncreasng levels of hghly-sklled mmgrants (e.g. Huth, 2004; Zmmerl et al., 2009; Schellenbauer et al., 2010). 16

18 17

19 18

20 6.1. Rsk of Unemployment Thus far we were unable to fnd clear support for the labour competton theory. Relyng on educaton or occupaton varables, however, provdes an ncomplete pcture of the labour market exposure to foregn compettors. Accordngly, n ths secton we go a step further by ncludng the rsk of unemployment n the models n equatons (2) and (3). As shown n the frst column of Table 4 and Table 5 respectvely, the fndngs outlned above reman vald when ncludng ndvdual rsk of unemployment n the models: only the workers wth a tertary educaton or n hgh-sklled occupatons have sgnfcantly more postve atttudes towards foregners. Moreover, the rsk of 19

21 unemployment does not seem to be relevant n explanng atttudes towards foregners n tself; ts coeffcent estmates are statstcally nsgnfcant. However, estmatng the ordered probt model separately for each level of educaton or occupaton shows that the propensty to hold postve atttudes towards foregners decreases wth an ncreasng rsk of unemployment only among hgh-educated workers or those n jobs demandng hgh sklls (cf. second, thrd and fourth column n Table 4 and Table 5 respectvely). Put dfferently, among hghly educated workers, atttudes towards foregners become more negatve wth hgher rsk of unemployment. Ths result s ndependent of whether values and belefs are controlled for (cf. Table 10 and Table 11 n the appendx). Ths pattern s hghlghted n Fgure 3 and Fgure 4 where predcted probabltes for y =1 (.e. strongly aganst equal opportuntes) and y =5 (.e. strongly n favour of equal opportuntes) are plotted as a functon of self-reported rsk of unemployment by educaton or occupaton level, respectvely. All explanatory varables n X are set to ther mean. Whle the hghest change n predcted probabltes vsble by the steepest curve s found among hghly-educated workers or those n jobs demandng hgh sklls, there s no sgnfcant change wth an ncreasng rsk of unemployment when consderng other levels of educaton or sklls. As llustrated n Fgure 3, for a ten-unt ncrease n unemployment rsk (from 0 to 10), the hghly educated see the predcted probablty of beng strongly aganst equal opportuntes doublng from 0.05 to 0.1 whereas ther predcted probablty of beng strongly n favour of equal opportuntes decreases by more than 10 percentage ponts. The predcted probabltes by occupaton level shown n Fgure 4 lead to the same concluson. 20

22 21

23 22

24 Fgure 3: Predcted probabltes by level of educaton Note: Predcted probabltes for y =1 ( strongly n favour of better opportuntes for Swss ctzens ) and y =5 ( strongly n favour of equal opportuntes for foregners ) based on estmates from Table 4 (2 nd, 3 rd & 4 th columns) when all explanatory varables n X are set to ther mean values. Ths fgure corresponds to fgure 4 where the level of occupaton s used. 23

25 Fgure 4: Predcted probabltes by level of occupaton Note: Predcted probabltes for y =1 ( strongly n favour of better opportuntes for Swss ctzens ) and y =5 ( strongly n favour of equal opportuntes for foregners ) based on estmates from Table 5 (2nd, 3rd & 4th columns) when all explanatory varables n X are set to ther mean values. Ths fgure corresponds to fgure 3 where the level of educaton s used. As a fnal test, we consder endogenety bas usng the varable unemployment occurrence n the last 12 months as an nstrumental varable. The result of the exogenety test s presented at the bottom of Table 4 and Table 5. It should be emphaszed that our nstrument s a sgnfcant predctor of U n the frst- stage equaton, wth most values of the F statstc exceedng 10 (cf. penultmate rows). 9 In addton, low values of the t statstc ndcate that the resduals n the second stage are never sgnfcant at a level of 10% (cf. last rows), meanng the null hypothess of exogenety s not rejected n all samples. Thus, there s no evdence of endogenety bas n the estmated coeffcents of U. 9 Stock and Watson (2003) suggest a smple rule of thumb accordng to whch a frst-stage F statstc less than 10 ndcates weak nstruments,.e. nstruments n frst-stage lnear regressons are weakly correlated wth the ncluded endogenous varables. 24

26 7. Concluson Ths paper has examned the labour-markets determnants of atttudes towards equal opportuntes for foregners, usng data from the 1999 wave of the Swss Household Panel survey. The case of Swtzerland was chosen because of ts hgh share of foregn ctzens and a clear concentraton of mmgrants n both low-sklled and hgh-sklled occupatons. Ths makes Swtzerland an deal case to study the labour market competton hypothess, compared to countres where mmgrants are concentrated at one end of the scale only. Whle most exstng studes use educatonal attanment to measure labour-market sklls, t s ncreasngly acknowledged that such an approach s lkely to lead to ncorrect conclusons. The level of educaton attaned reflects noneconomc unobservables n addton to actual skll endowment. Here we control for proxes of values and belefs opnons on Swss tradton and trust n organsatons for the defence of human rghts when estmatng the atttudnal effects of educaton. Moreover, unlke most earler studes, we account for non-lnearty n the relatonshp between educaton and atttudes snce foregn workers are over-represented at both the bottom and the top of the educaton dstrbuton. In a further step, the self-assessed rsk of unemployment n the followng 12 months s added to the baselne models to capture ndvdual exposure to competton from foregners. As an addtonal contrbuton to the lterature, we also nteract ths varable wth the level of educaton n order to relax the assumpton that the atttudnal mpact of unemployment rsk s the same for dfferent educatonal levels. To assess the robustness of our fndngs, we have also tested the labour market competton hypothess usng levels of occupaton rather than levels of educaton. Based on the strong assumpton that educaton s uncorrelated wth values and belefs, estmatng the atttudnal effects of educaton by ordered probt produces results n lne wth the lterature on the determnants of atttudes towards mmgraton: hgher levels of educaton are postvely related to postve atttudes towards foregners. Put dfferently, low-educated workers are least n favour of equal opportuntes for foregners, whle we fnd the opposte drecton for hghly educated workers. These results, however, are consstent wth omtted varable bas, because once ndcators for values and belefs are taken nto account n a model that allows for non-lnear educaton effects, the mpact of havng a low level of educaton on ant-foregner atttudes s no longer sgnfcant: low-educated workers do not exhbt ant-foregner atttudes as predcted by the labour market competton hypothess. Ths result contrasts wth most exstng studes n the feld. Wth regard to hghly educated workers, they are more lkely to express postve vews towards foregners than ther counterparts wth an upper secondary educaton. Ths s true rrespectve of the control for values and belefs. Put dfferently, the varables of values and belefs ncluded here are unable to explan the atttudnal dfference between ndvduals wth upper secondary and tertary educaton. In contrast to the other groups consdered, however, hghly educated workers have ncreasngly negatve atttudes towards foregners wth an ncreasng rsk of unemployment. Ths fndng somehow complements research by Ortega and Polaveja (2012) who showed that hghly educated workers protected by more job-specfc human captal tend to have 25

27 more favourable atttudes towards mmgrants. Accordng to our results, the labour market competton hypothess does hold, but only for Swss workers wth a tertary educaton or n hgh-sklled occupatons. On the whole, the fndngs n ths artcle reveal that atttudes towards equal opportuntes for foregners cannot be entrely attrbutable to the skll composton of the foregn workforce wthn the Swss labour market. Indeed, we have demonstrated that the strong negatve lnk between a low level of educaton and postve atttudes towards foregners s drven by dfferences n values and belefs. At the same tme, the postve lnk between a hgh level of educaton and postve atttudes towards foregners hdes a more complex pcture, n whch a hgher rsk of unemployment leads to less postve atttudes towards foregners. Wth ths, we fnd support for labour-force competton theory, but only for specfc groups: hghly educated and hghly sklled workers. At the other end of the sklls scale, negatve atttudes towards foregners seem to be drven by ndvdual values and belefs. We would argue that economc and cultural explanatons should not be seen as competng theores for atttudes towards foregners, but as complementary mechansm that affect dfferent parts of the populaton n dstnct ways. 26

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