The impact of cross-border commuters on occupational wages: Comparison of some nonparametric tests and their application to unemployment in Geneva

Abstract

The bilateral treaty on free mobility between the European Union and Switzerland has adversely affected native private sector low-skilled workers in the lower range of the earnings distribution. If cross-border commuters’ wages are prioritised over the local wages, the (pre-bilateral agreement) wage distribution between cross-border employees and local ones will intersect. This paper considers the statistical methods that can be used to test for this form of spatial interaction affecting the evolution of regional unemployment. Numerical simulations suggest that recently developed tests for distribution-crossing are powerful even when the two distributions under study are fairly similar, and that these tests can be usefully combined with more standard quantile tests to characterise unskilled occupational wages at the bottom. We apply this approach to unemployment data in Geneva and find that workforce participation among the local low-skilled workers was lower than that of low-qualified cross-border commuters.