The conditionality of the substitution thesis on type of urban economy

Studies on the substitution thesis in advanced economies show scattered results: the impact of immigration on the wages and unemployment of lower-educated natives and immigrants varies strongly. In both studies on the substitution thesis itself, as well as studies on the unequal development of urban economies in post-industrialism, there are suggestions that this is because the substitution thesis is conditional on the type of urban economy. More specific, they indicate there is reason to expect that a strong service-centered urban economy yields more labour demand for the lower educated, which consequently mitigates the substitution between immigrants and natives or earlier waves of immigrants. The empirical validity of this expectation is tested by comparing the impact of immigration on the employment level of lower-educated urbanites between 22 Dutch metropolitan areas. The findings corroborate the central hypothesis: immigration leads to higher unemployment levels, but this impact is weaker in the most service-centered urban economies.