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Title: The long-run effect of Immigration on Productivity: Theory and Evidence from the U.S.
Citation Type: Miscellaneous
Publication Year: 2005
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Abstract: The recent empirical literature finds negative effects of the inflowsof immigrants on the wages and employment of US-born workers especiallylow skilled and very small aggregate gains if we include the effecton capital. Our paper begins by revealing an empirical regularity apparentlyat odds with these findings: in a panel of city-level data over time(1970-2000) the inflows of immigrants has a robust positive associationwith average wages, employment and value of housing of US-born citizens.At the same time the negative relative effect of foreign-born onwages of U.S. born in the same skill group is confirmed by our analysis.We reconcile these two findings by showing that if foreign-born workersprovide skills (and produce services) that are not perfectly substitutablefor those provided by US-born workers, and with a distribution acrosseducation-experience groups "complementary" to that of U.S. born, thenmigration generates overall gains to U.S. born workers. There are, however,distributional effects that hurt, in relative terms, the group of lessskilled workers . We provide a simple model that quantifies the impactof immigrants on average wages of US-born workers. For an increase inforeign-born worker of 6% of the initial US employment (as experiencedby the US in the 1990-2000 decade) the average wages of US workers increaseby 2% of their levels. We then simulate a more complete model ofopen city-economies that, using structural parameter values, reproducesfairly well the response of average wages, price of housing and internal migration of US-born to the immigration shock of the 90s.
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Authors: Peri, Giovanni; Ottaviano, Gianmarco I.P.
Publisher: Universita di Bologna
Data Collections: IPUMS USA
Topics: Education, Labor Force and Occupational Structure, Migration and Immigration
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