Do stock prices react to immigration restrictions? Evidence from an event study in Switzerland

ABSTRACT

This article tests the effects of sudden immigration restrictions on stock prices of firms in industries with high shares of immigrants. It estimates the abnormal returns as a function of the share of migrants by industry. To do so, one specific event – a referendum on migration policy with an unexpected outcome – that will potentially cut off Swiss listed companies from the supply of foreign labour is studied. Although operating in an industry with a high share of immigrants is associated with lower returns, the effect is not very strong, which indicates that investors seem to trust the government to leave some leeway in the implementation of the constitutional amendment that was voted on.

KEYWORDS:

• Immigration control
• migration
• firm value
• event study

JEL CLASSIFICATION:

• D72
• F22
• K37

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ The results are robust to changes in the estimation window.

Additional information

Funding

This research was funded by the Swiss National Science Foundation; Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung.