Go with the Flow
The Impact of Immigration on Native Poverty through Labor Market Competition
Giovanni Peri
NBER Working Paper, November 2011
Abstract:
In this paper I first analyze the wage effects of immigrants on native workers in the US economy and its top immigrant-receiving states and metropolitan areas. Then I quantify the consequences of these wage effects on the poverty rates of native families. The goal is to establish whether the labor market effects of immigrants have significantly affected the percentage of "poor" families among U.S.-born individuals. I consider the decade 2000-2009 during which poverty rates increased significantly in the U.S. As a reference, I also analyze the decade 1990-2000. To calculate the wage impact of immigrants I adopt a simple general equilibrium model of productive interactions, regulated by the elasticity of substitution across schooling groups, age groups and between US and foreign-born workers. Considering the inflow of immigrants by age, schooling and location I evaluate their impact in local markets (cities and states) assuming no mobility of natives and on the US market as a whole allowing for native internal mobility. Our findings show that for all plausible parameter values there is essentially no effect of immigration on native poverty at the national level. At the local level, only considering the most extreme estimates and only in some localities, we find non-trivial effects of immigration on poverty. In general, however, even the local effects of immigration bear very little correlation with the observed changes in poverty rates and they explain a negligible fraction of them.
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Philip Oreopoulos
American Economic Journal: Economic Policy, November 2011, Pages 148-171
Abstract:
Thousands of randomly manipulated resumes were sent in response to online job postings in Toronto to investigate why immigrants, allowed in based on skill, struggle in the labor market. The study finds substantial discrimination across a variety of occupations towards applicants with foreign experience or those with Indian, Pakistani, Chinese, and Greek names compared with English names. Listing language fluency, multinational firm experience, education from highly selective schools, or active extracurricular activities had no diminishing effect. Recruiters justify this behavior based on language skill concerns but fail to fully account for offsetting features when listed.
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Anxious Publics: Worries About Crime and Immigration
Jennifer Fitzgerald, Amber Curtis & Catherine Corliss
Comparative Political Studies, forthcoming
Abstract:
In this article the authors investigate the relationship between concerns about crime and concerns about immigration. Panel survey data from Germany allow the authors to examine people's views about immigration as they develop over time, showing that consternation about crime is a significant predictor of anxiety over immigration. Moreover, it has a greater substantive impact than other explanatory factors, such as concerns about the economy and objective measures of crime and immigration at the regional level. The authors also demonstrate an interactive effect: The connection between these two issues is especially strong among those interested in politics. A confirmatory step using the European Social Survey reveals that the moderating effect of political engagement is generalizable to the rest of Western Europe. These findings establish that crime is a critical issue for the formation of immigration attitudes. They also highlight individual-level characteristics that drive the bundling of political issues in people's minds.
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Rethinking the Effect of Immigration on Wages
Gianmarco Ottaviano & Giovanni Peri
Journal of the European Economic Association, forthcoming
Abstract:
This paper calculates the effects of immigration on the wages of native US workers of various skill levels in two steps. In the first step we use labor demand functions to estimate the elasticity of substitution across different groups of workers. Second, we use the underlying production structure and the estimated elasticities to calculate the total wage effects of immigration in the long run. We emphasize that a production function framework is needed to combine own-group effects with cross-group effects in order to obtain the total wage effects for each native group. In order to obtain a parsimonious representation of elasticities that can be estimated with available data, we adopt alternative nested-CES models and let the data select the preferred specification. New to this paper is the estimate of the substitutability between natives and immigrants of similar education and experience levels. In the data-preferred model, there is a small but significant degree of imperfect substitutability between natives and immigrants which, when combined with the other estimated elasticities, implies that in the period from 1990 to 2006 immigration had a small effect on the wages of native workers with no high school degree (between 0.6% and +1.7%). It also had a small positive effect on average native wages (+0.6%) and a substantial negative effect (-6.7%) on wages of previous immigrants in the long run.
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Testing the ‘brain gain' hypothesis: Micro evidence from Cape Verde
Catia Batista, Aitor Lacuesta & Pedro Vicente
Journal of Development Economics, January 2012, Pages 32-45
Abstract:
Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest ‘brain drain' in Africa, despite a marked record of income and human capital growth in recent decades. We propose the first explicit test of ‘brain drain' arguments, according to which the prospects of own future migration can positively impact educational attainment. Our most conservative estimates using individual specific variation in economic conditions at the destination indicate that a 10 pp increase in the probability of own future migration improves the probability of completing intermediate secondary schooling by nearly 4 pp for individuals who do not migrate before age 16. These findings are robust to the choice of instruments and econometric specification. Counterfactual simulations point to significant human capital gains from lowering migration barriers.
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Jean Boivin, Robert Clark & Nicolas Vincent
Journal of International Economics, forthcoming
Abstract:
Numerous studies have documented substantial deviations from the law of one price for consumer goods. However, in most cases small transaction costs can explain these violations. In our study, we purposely focus on a market where such frictions are minimal, namely online bookselling in the US and Canada. We exploit the high frequency nature of the data to disentangle nominal rigidities from market segmentation and show that while firms seem to respond to domestic competitive pressure, there is no evidence that they react to fluctuations in the relative price of foreign competition following exchange rate movements. In addition, we cannot identify any significant impact on sales volume stemming from variations in international relative prices. Hence, our results suggest that even in an environment with minimal frictions, international market segmentation is extensive and responsible for violations of the law of one price.
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A Sorted Tale of Globalization: White Collar Jobs and the Rise of Service Offshoring
Runjuan Liu & Daniel Trefler
NBER Working Paper, November 2011
Abstract:
We study how the rise of trade in services with China and India has impacted U.S. labour markets. The topic has two understudied aspects: it deals with service trade (most studies deal with manufacturing trade) and it examines the historical first of U.S. workers competing with educated but low-wage foreign workers. Our empirical agenda is made complicated by the endogeneity of service imports and the endogenous sorting of workers across occupations. To develop an estimation framework that deals with these, we imbed a partial equilibrium model of ‘trade in tasks' within a general equilibrium model of occupational choice. The model highlights the need to estimate labour market outcomes using changes in the outcomes of individual workers and, in particular, to distinguish workers who switch ‘up' from those who switch ‘down'. (Switching ‘down' means switching to an occupation that pays less on average than the current occupation). We apply these insights to matched CPS data for 1996-2007. The cumulative 10-year impact of rising service imports from China and India has been as follows. (1) Downward and upward occupational switching increased by 17% and 4%, respectively. (2) Transitions to unemployment increased by a large 0.9 percentage points. (3) The earnings of occupational ‘stayers' fell by a tiny 2.3%. (4) The earnings impact for occupational switchers is not identified without an assumption about worker sorting. Under the assumption of no worker sorting, downward (upward) switching was associated with an earning change of -13.9% (+12.1%). Under the assumption of worker sorting, there is no statistically significant impact on earnings.
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Immigration and Status Exchange in Australia and the United States
Kate Choi et al.
Research in Social Stratification and Mobility, forthcoming
Abstract:
This paper evaluates the status exchange hypothesis for Australia and the United States, two Anglophone nations with long immigration traditions whose admission regimes place different emphases on skills. Using log-linear methods, we demonstrate that foreign-born spouses trade educational credentials via marriage with natives in both Australian and U.S. marriage markets and, moreover, that nativity is a more salient marriage barrier for men than for women. With some exceptions, immigrant spouses in mixed nativity couples are better educated than native spouses in same nativity couples, but status exchange is more prevalent among the less-educated spouses in both countries. Support for the status exchange hypothesis is somewhat weaker in Australia partly because of lower average levels of education compared with the United States and partly because of less sharply defined educational hierarchy at the postsecondary level.
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The Costs and Benefits of Immigration
Darrell West
Political Science Quarterly, Fall 2011, Pages 427-443
Abstract:
Darrell M. West seeks to reframe the public debate over immigration policy by arguing that the benefits of immigration are much broader than popularly imagined and the costs more confined. He contends that in spite of legitimate fear and anxiety over illegal immigration, immigrants bring a "brain gain" of innovation and creativity that outweighs real or imagined costs.
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The distributional effects of NAFTA in Mexico: Evidence from a panel of municipalities
Kathy Baylis, Rafael Garduño-Rivera & Gianfranco Piras
Regional Science and Urban Economics, January 2012, Pages 286-302
Abstract:
This paper studies the regional distribution of benefits from trade in Mexico after the North American Free Trade Agreement (NAFTA). Specifically, we ask whether or not NAFTA increased the concentration of economic activity in Mexico. Unlike previous work which uses state-level data, we identify the effect of NAFTA on economic activity at the municipal level allowing us to observe detailed growth patterns across space. To explicitly identify the effect of the trade agreement, we contrast changes in economic activity in regions and sectors more and less likely to be affected by trade. Given the spatial nature of these data, we make use of spatial panel econometric methods. We find that NAFTA caused wealthy regions nearest to the border to grow faster than others, increasing regional disparity. We also find that economic activity in densely populated regions grew less quickly after NAFTA, particularly in the case of traded sectors. Thus, we see evidence that agglomeration lost some of its draw after NAFTA. We also find that regions with a smaller portion of high school graduates and lower levels of infrastructure saw their growth increase after the trade agreement, decreasing regional disparity. We notice these redistributive effects are strongest in the non-traded sectors.
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The Contact Hypothesis and Attitudes Toward Latinos in the United States
Christopher Ellison, Heeju Shin & David Leal
Social Science Quarterly, December 2011, Pages 938-958
Objectives: Although the contact hypothesis occupies an important place in the study of intergroup relations, several important questions remain understudied. We contribute to the literature by examining the associations between multiple aspects of contact with Latinos and several types of attitudes toward U.S. Latinos, including attitudes toward immigration restrictions.
Methods: We use OLS and logistic regression techniques to analyze the opinions of Anglo (non-Hispanic white) and African-American respondents from the 2000 NORCGeneral Social Survey (GSS), which contained a special module on attitudes regarding ethnicity and diversity issues.
Results: Our findings reveal a clear association between close nonkin Latino ties, that is, friendship, and more favorable or empathetic attitudes toward Latinos as well as less restrictive or punitive views concerning immigration policy. Having Latino relatives is also linked with several of these attitudes. Most other dimensions of contact (e.g., attending high schools with significant Latino populations, having Latino acquaintances, Spanish-language fluency, and residing in areas with relatively high Latino populations) have at least some association with the attitudes under study, although for most of these contact measures the significance of the effects is inconsistent across outcomes.
Conclusions: The findings reinforce the significance of intergroup friendships and underscore the importance of understanding their social origins, patterning, and consequences for diverse groups. It is also important to probe the differential effects of specific types and arenas of intergroup contact on specific attitudinal and policy outcomes.
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Feast or Flee: Government Payments and Labor Migration from US Agriculture
Jeremy D'Antoni, Ashok Mishra & Andrew Barkley
Journal of Policy Modeling, forthcoming
Abstract:
Government payments have been a part of agriculture since 1933 and at no time has the government stated a policy objective of decreasing the agricultural labor force. The reality of the matter may be considerably different. Using time series data and new econometric techniques, this study finds agricultural policy may have an unintended impact on labor migration. Specifically, we find that government payments increased labor migration from the farm. From 1939 to 2007, increased direct government payments resulted in greater migration of labor from agriculture. Government policy appears to have shown limited success at sustaining the agricultural labor force.
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The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data
David Hummels et al.
NBER Working Paper, October 2011
Abstract:
We estimate how offshoring and exporting affect wages by skill type. Our data match the population of Danish workers to the universe of private-sector Danish firms, whose trade flows are broken down by product and origin and destination countries. Our data reveal new stylized facts about offshoring activities at the firm level, and allow us to both condition our identification on within-job-spell changes and construct instruments for offshoring and exporting that are time varying and uncorrelated with the wage setting of the firm. We find that within job spells, (1) offshoring tends to increase the high-skilled wage and decrease the low-skilled wage; (2) exporting tends to increase the wages of all skill types; (3) the net wage effect of trade varies substantially across workers of the same skill type; and (4) conditional on skill, the wage effect of offshoring exhibits additional variation depending on task characteristics. We then track the outcomes for workers after a job spell and find that those displaced from offshoring firms suffer greater earnings losses than other displaced workers, and that low-skilled workers suffer greater and more persistent earnings losses than high-skilled workers.
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In the neighborhood: The trade effects of the Euro in a spatial framework
Harry Kelejian, George Tavlas & Pavlos Petroulas
Regional Science and Urban Economics, January 2012, Pages 314-322
Abstract:
Trade is spatial in nature. However, when specifying trade regressions, spatial issues are typically not accounted for in a satisfactory way. We specify a trade model which relates to the effects that the introduction of the euro had on exports for the euro countries. Our model contains country pair fixed effects and error terms which are spatially and time autocorrelated, as well as heteroskedastic. Our spatial weighting matrix has unique characteristics. Our model also allows for endogenous regressors, and so we estimate it by an instrumental variable procedure. We find that the results of estimation are substantially affected when one accounts for statistical complications. Specifically, the intra euro effects on exports are significantly reduced and are only "borderline" significant. Also, dummy variables measuring the effects of EU-membership on exports become insignificant. The results relating to other variables do not seem to be substantially affected. All of this suggests that, perhaps, the effects of currency unions on trade as described in the previous literature have been overstated.
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The Location of Foreign Human Capital in the United States
Brigitte Waldorf
Economic Development Quarterly, November 2011, Pages 330-340
Abstract:
Among the millions of newcomers entering the United States every decade, those with extensive human capital are of particular importance for local economies. This study uses data from the American Community Surveys, 2004 to 2007 and compares the locational patterns of highly educated individuals coming from abroad with that of highly educated individuals migrating internally. The study finds that the locational choices of highly educated newcomers from abroad are similar to those of highly educated domestic migrants but that there are some important differences. Gateway states are substantially more successful in attracting human capital from abroad than domestic human capital; foreign human capital is more strongly attracted to existing human capital agglomerations than domestic human capital; and a manufacturing-based industry is a deterrent for the attraction of both foreign and domestic highly educated in-migrants, but the deterrent effect is stronger for domestic human capital than for human capital from abroad.
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Religion, religiosity and educational attainment of immigrants to the USA
Sankar Mukhopadhyay
Review of Economics of the Household, December 2011, Pages 539-553
Abstract:
This paper quantifies the association between religions, religiosity and educational attainment of new lawful immigrants to the US. This paper considers a broad set of religions that includes most of the major religions of the world. Using data from the New Immigrant Survey (2003), we show that affiliation with religion is not necessarily associated with an increase in educational attainment. Muslim and "Other religion" immigrants have less education compared to the immigrants who are not affiliated with any religion. However, affiliation with the Jewish religion is associated with higher educational attainment for males. With regard to religiosity, our results show that high religiosity is associated with lower educational attainment, especially for females. We also outline alternative frameworks that provide insight about the mechanisms that link religion and religiosity with educational attainment.