1 The impact of immigrant settlements on Italian firms Ivan Etzo*, Carla Massidda* and Romano Piras* * Department of Economics and Business, University of Cagliari July 2015 Abstract An increase in foreign labour supply might represent an opportunity for firms to both cut their costs and increase productivity. Accordingly, new establishments might be opened or relocated where there is abundance of foreign workforce. This study investigates the impact of immigration on both the number of local units and employees at Italian provincial level during the 2004-2010 time span. The results show positive effects on both response variables at aggregate and sectoral level. Once focused on natives’ employment, the results exclude any displacement effect for the low-skilled natives, whilst for the high-skilled native workers the estimated impact is positive and statistically significant. Keywords: employment, firms, immigrants. JEL Classification: R1, J61