Effects of Foreign Labour on the Production Pattern: The Swiss Case

Abstract

A marked correlation can be observed between the rate of investment and the proportion of foreign workers on the labour market, the main feature of both series being a reversal of trend in the mid-1960s. An attempt has therefore been made to demonstrate a causal link between changes in policy on foreign labour and changes in the economy. Some of the main results of the study are discussed below, in two stages. First, an estimate is made of Cobb-Douglas production functions – which have elasticities of substitution equal to one – in order to assess the productivity of factors and the nature of returns to scale, as well as the type and extent of technical progress. Second, an attempt is made to assess the possibilities for substitution between factors of production in order to determine the influence of foreign labour on factor markets, particularly the market for indigenous labour.