Full Citation

Title: The Real Immigrant-Native Wage Inequality

Citation Type: Working Paper

Publication Year: 2012

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Abstract: Real wages are typically calculated using a common price index that represents average prices nationwide. However, immigrants tend to settle in relatively expensive urban locations; deflating their nominal wages with a nationwide index understates the prices they face and overstates their real wages. I examine the implications of this price and settlement variation for the measurement of immigrant-native wage inequality and cohort assimilation. Accounting for the spatial variation in prices, the U.S. immigrant-native wage gap is much larger in real terms than in nominal terms. Relative wage improvements are slower in real terms over 1980-1990. Over 1990-2000 the pattern reverses; relative wage improvements are faster in real terms for each cohort. The rate of assimilation is slightly slower over 1980-2000. I consider a simple spatial equilibrium framework to interpret immigrants location decisions. The model allows for spatial differences in productivity and quality of life, which implicitly influence workers location choice. Calibration of the model suggests productivity differences are more important determinants of the relative concentration of immigrants.

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Authors: Dadson, Nick

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Publication Number: 12-16

Institution: Metropolis British Columbia

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Publisher Location: British Columbia, Canada

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Migration and Immigration

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