The nineties has been a period of increasing migratory flows from less developed countries to industrialized nations. It is instructive to compare the two largest economies in the world, the European Union and the United States, in terms of the magnitude, trends and composition of their migratory inflows. While the two economies are similar in terms of size and level of development, the European Union still lags behind in its ability to attract immigrants and in the degree of internal mobility of its citizens. Moreover we document a general feature that became more prominent during the nineties. While both economies attracted less educated workers (primary school graduates) as well as highly educated workers (college graduates) from less developed countries, the United States have been able to attract “talent” ( i.e. the best among the skilled workers) from all over the world at a rate unmatched by the European Union. In fact the U.S. attracted a large number of talents from the European Union itself during the nineties. This “brain drain” (probably driven by the large economic reward granted by the American economy to scientific, technological and professional talent) is worrisome for the European Union. Its ability to keep pace with the economic growth of the United States depends, in fact, on its ability to compete in the scientific and technological fields.

In this paper we analyze the effect of immigrants on native jobs in fourteen Western

European countries. We test whether the inflow of immigrants in the period 1996-2007

decreased employment rates and/or if it altered the occupational distribution of natives

with similar education and age. We find no evidence of the first but significant evidence

of the second: immigrants took “simple” (manual-routine) type of occupations and natives

moved, in response, toward more “complex” (abstract-communication) jobs. The

results are robust to the use of an IV strategy based on past settlement of different nationalities

of immigrants across European countries. We also document the labor market

flows through which such a positive reallocation took place: immigration stimulated job

creation, and the complexity of jobs offered to new native hires was higher relative to

the complexity of destructed native jobs. Finally, we find evidence that the occupation

reallocation of natives was significantly larger in countries with more flexible labor laws.

This tendency was particularly strong for less educated workers.