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Title: The Interactive Effect of Immigration and Offshoring on U.S. Wages

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: We jointly analyze the effects of low-skilled immigration and offshoring on wages of American workers of different skill levels and task specializations. We show that offshoring affects native wage response to immigration and explain the likely economic mechanism responsible. Focusing on commuting zone outcomes and analyzing a period of high immigration and off- shoring exposure growth, between 1990 and 2000, we find that wages of low-skilled natives increase in response to offshoring, decrease in response to low-skilled immigration, and that the wage effect of immigration becomes more negative with more offshoring. We present a theoretical model to demonstrate how this interactive effect of immigration and offshoring can come about. Specifically, we show that offshoring increases native wage elasticity in response to immigration if it increases immigrant wage share; this happens if a relatively larger share of native jobs than immigrant jobs is offshored, causing natives to shift to performing tasks in which they have lower comparative advantage and immigrants to concentrate in tasks for which they have greater comparative advantage.

Url: https://olegfirsin.com/wp-content/uploads/2017/11/OFirsin_JMP_draftNovember.pdf

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Authors: Firsin, Oleg

Publisher: Cornell University

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Migration and Immigration

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