Do immigrants working illegally reduce the natives legal employment?
PIP: This paper examines how immigrants working illegally in the shadow economy affect the legal employment of native and foreign workers in the official economy of Italy. The data set used was provided by the Central Statistical Office and includes information regarding the units of labor employed both in official production and in underground production; employment in the latter is subdivided into native workers and foreign workers. Estimates were then made as to how “legal employment” has reacted to changes in “illegal employment”, with special reference to the effect of the foreign component of “illegal labor”. The results of the cross sector-time series analysis of the demand for legal labor in the Italian economy from 1980 to 1995 showed that the increase of illegal units of labor produces a reduction in the use of legal labor, albeit a very limited one. An analysis by sectors shows that the competitive effects of illegal foreign workers is not homogeneous and is strongest in the
