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Immigration and Production Technology

Author

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  • Ethan Lewis

    (Department of Economics, Dartmouth College, Hanover, New Hampshire 03755, and National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

Research on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the long-run labor market impact of immigration. A level of capital-skill complementarity supported in studies both involving and not involving immigration alone reduces the relative wage impact of immigration by 40% compared to simulations with separable capital. Other models in which the production structure responds to skill-mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, also imply that the long-run impact of immigration on wages is smaller than predicted by the standard model. This article discusses new research that tries to credibly evaluate such models using immigration-induced variation in the skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.

Suggested Citation

  • Ethan Lewis, 2013. "Immigration and Production Technology," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 165-191, May.
    • Handle: RePEc:anr:reveco:v:5:y:2013:p:165-191
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080612-134132
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    More about this item

    Keywords

    capital-skill complementarity; choice of technique; innovation;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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