Using a database that includes the universe of individuals and
establishments in Denmark over the period 1991-2008 we analyze the effect of
a large inflow of non-European (EU) immigrants on Danish workers. We first
identify a sharp and sustained supply-driven increase in the inflow of
non-EU immigrants in Denmark, beginning in 1995 and driven by a sequence of
international events such as the Bosnian, Somalian and Iraqi crises. We then
look at the response of occupational complexity, job upgrading and
downgrading, wage and employment of natives in the short and long run. We
find that the increased supply of non-EU low skilled immigrants pushed
native workers to pursue more complex occupations. This reallocation
happened mainly through movement across firms. Immigration increased
mobility of natives across firms and across municipalities but it did not
increase their probability of unemployment. We also observe a significant
shift in the native labor force towards complex service industries in
locations receiving more immigrants. The complementarity of immigrants and
the career progression towards more complex occupations generated a
significant wage and earnings increase for more and less educated native
workers, especially in the complex service sector. Those mechanisms
protected individual wages from immigrants competition and enhanced their
wage outcomes. While the highly educated experienced wage gains already in
the short-run, the gains of the less educated built up over time as they
moved towards jobs that were complementary to those held by the non-EU
immigrants.