Do stock prices react to immigration restrictions? Evidence from an event study in Switzerland

This article tests the effects of sudden immigration restrictions on stock prices of firms in industries with high shares of immigrants. It estimates the abnormal returns as a function of the share of migrants by industry. To do so, one specific event – a referendum on migration policy with an unexpected outcome – that will potentially cut off Swiss listed companies from the supply of foreign labour is studied. Although operating in an industry with a high share of immigrants is associated with lower returns, the effect is not very strong, which indicates that investors seem to trust the government to leave some leeway in the implementation of the constitutional amendment that was voted on.