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This paper investigates the dynamics of wage adjustment to an exogenous increase
in labor supply by exploiting the sudden and unexpected inflow of repatriates to France
created by the independence of Algeria in 1962. I measure the impact of this particular
supply shift on the average wage of pre-existing native workers across French regions
between 1962 and 1976. I find that regional wages decline between 1962 and 1968,
before returning to their pre-shock level 15 years after. While regional wages recovered,
this particular supply shock had persistent distributional effects. By increasing the
relative supply of high educated workers, the inflow of repatriates contributed to reduce
wage inequality between high and low educated native workers over the whole period
considered (1962-1976).
