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Posted Workers: Complements or Substitutes for Local Employment? Empirical Evidence from the EU

This paper investigates the effects of the intra-European posting of workers on domestic labour markets in the years 2007-2009. Instrumental variables related to migrant labour and neighbouring countries’ populations are used to address the endogeneity between posting and labour market features. Contrary to conventional wisdom, we find that an intensification of posting inflows is not likely to displace domestic workers. Instead, an increase in posting from abroad may rise both domestic labour costs and productivity. Results point toward the complementarity between domestic and posted workers, so that posting can actually improve labour efficiency and put upward pressure on labour costs.