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Title: Assessing the Wage Effects of Immigration and the Validity of "Bartik" Instruments
Citation Type: Miscellaneous
Publication Year: 2016
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Abstract: Recent work in the U.S. immigration literature has established that immigration flows and domestic workers wages are positively correlated. That this correlation reflects an economic relationship is less clear. Using the predictions of a framework wherein foreign and domestic labor inputs are imperfectly substitutable, this paper shows that the correlations in the U.S. data do not support the theory. Particularly troubling is the finding of a positive correlation between immigrant flows and previous immigrants wages. Further, this positive correlation is shown to persist when using the Enclave instrument (used in Card (2001), for example). Prompted by these findings, this paper provides conditions under which Bartik-style instruments, of which the Enclave instrument is an example, are valid. I show that Bartik instruments do not convincingly meet the conditions required for identification in a system of labor supply and demand. I propose and implement alternative empirical strategies with the Enclave instrument, finding no evidence in favour of imperfect substitution between foreign and domestic workers
Url: http://mattcourchene.com/wp-content/uploads/2016/05/Draft-1.pdf
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Authors: Courchene, Matthew J
Publisher: University of British Columbia
Data Collections: IPUMS USA
Topics: Labor Force and Occupational Structure, Migration and Immigration
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