Fabrizio Colella (USI Lugano)
Christian Dustmann and Josef Zweimüller
This paper studies how cross-border workers affect local labor markets on both sides of the Swiss-Italian border. The analysis combines Swiss and Italian administrative data and exploits variation in distance to the nearest Ticino border crossing as an instrument for changes in cross-border-worker exposure at the municipality level. A central contribution is a decomposition of regional outcomes into worker- flow components that separates aggregate effects from changes driven by workforce composition. This framework isolates a pure wage effect for continuously employed workers and distinguishes it from effects operating through inflows and outflows. The results indicate that the decomposition is empirically informative and that focusing on stayers provides a substantially different view of wage responses than standard area-level estimates. In particular, compositional adjustments attenuate aggregate wage effects, implying that conventional regional estimates do not directly reflect wage changes for incumbent workers. The paper emphasizes the importance of accounting for worker reallocation when evaluating the labor-market consequences of cross-border integration.