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Title: Immigrants' Residential Choices and their Consequences
Citation Type: Miscellaneous
Publication Year: 2017
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Abstract: Where do immigrants choose to settle and what are the consequences of their location choices for economic activity and welfare? This paper provides a new perspective on these questions by investigating the causes and effects of the spatial distribution of immigrants across US cities. We document that, over the last decades: a) immigrants have increasingly concentrated in large, high-wage, and expensive cities, and b) the earnings gap between immigrants and natives is higher in larger and more expensive cities. This relationship between city characteristics and the wage gap is stronger for immigrants from low-income countries and those who have spent fewer years in the United States and is robust in controlling for immigration networks. In order to explain these findings, we develop a simple spatial equilibrium in which immigrants consume (either directly, via remittances, or future consumption) a fraction of their income in their countries of origin. Thus, immigrants not only care about local prices, but also about price levels in their home country. Hence, if foreign goods are cheaper than local goods, immigrants prefer to live in high-wage, high-price cities, where they also accept lower wages than natives. Given that large and more expensive cities tend to be more productive, immigrant location choices move economic activity toward more productive cities, which results in total output gains. We estimate that current levels of immigration increase total aggregate output per worker by around .15 percent. We also discuss welfare implications.
Url: http://conference.iza.org/conference_files/AMM_2017/albert_c25077.pdf
User Submitted?: No
Authors: Albert, Christoph; Monras, Joan
Publisher: UPF
Data Collections: IPUMS USA
Topics: Housing and Segregation, Migration and Immigration
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