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Rethinking the area approach: Immigrants and the labor market in California

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  • Peri, Giovanni

Abstract

A framework that uses a Constant Elasticity of Substitution (CES) production function with skill differentiation and integrated national labor markets has predictions for the employment effect of immigrants at the local level. The employment (rather than wage) response to immigration by skill in a state reveals the production substitutability-complementarity between native and immigrant labor. This, in turn, reveals the degree to which immigrants stimulate or depress the demand for native labor. To estimate this elasticity, I use a novel instrument based on demographic characteristics of total Central American migrants or of the Mexican Population to predict immigration by skill level within California. Looking at immigration to California between 1960 and 2005 these estimates support the assumption of a nationally integrated labor market by skill and they support the hypothesis that natives and immigrants in the same education-experience group are not perfectly substitutable. This explains the counter-intuitive fact that there is a zero correlation between immigration and wage and employment outcomes of natives in the state.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 84 (2011)
Issue (Month): 1 (May)
Pages: 1-14

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Handle: RePEc:eee:inecon:v:84:y:2011:i:1:p:1-14

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Immigration Native employment Inter-state migration Complementarity;

References

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  1. David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
  2. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  3. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  4. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers 252, Centro Studi Luca d\'Agliano, University of Milano.
  5. George J. Borjas & Lawrence F. Katz, 2005. "The Evolution of the Mexican-Born Workforce in the United States," NBER Working Papers 11281, National Bureau of Economic Research, Inc.
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  7. David Card, 2009. "Immigration and Inequality," NBER Working Papers 14683, National Bureau of Economic Research, Inc.
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  9. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2008. "Imperfect Substitution between Immigrants and Natives: A Reappraisal," NBER Working Papers 13887, National Bureau of Economic Research, Inc.
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  13. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  14. Giovanni Peri & Chad Sparber, 2010. "Assessing Inherent Model Bias: An Application to Native Displacement in Response to Immigration," NBER Working Papers 16332, National Bureau of Economic Research, Inc.
  15. George J. Borjas, 2006. "Native Internal Migration and the Labor Market Impact of Immigration," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
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  17. David Card, 2007. "How Immigration Affects U.S. Cities," CReAM Discussion Paper Series 0711, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
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  21. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S65-97, October.
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Citations

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Cited by:
  1. Tiago Freire & Xiaoye Li, 2013. "How Immigration Reduced Social Capital in the US: 2005-2011," ERSA conference papers ersa13p1285, European Regional Science Association.
  2. Giulia Faggio & Henry G. Overman, 2013. "The effect of public sector employment on local labour markets," LSE Research Online Documents on Economics 50482, London School of Economics and Political Science, LSE Library.
  3. Siegenthaler, Michael & Basten, Christoph, 2013. "Do immigrants take or create residents jobs? Quasi-experimental evidence from Switzerland," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79780, Verein für Socialpolitik / German Economic Association.
  4. Blake Sisk & Carl Bankston, 2014. "Hurricane Katrina, a Construction Boom, and a New Labor Force: Latino Immigrants and the New Orleans Construction Industry, 2000 and 2006–2010," Population Research and Policy Review, Springer, vol. 33(3), pages 309-334, June.
  5. Sari Pekkala Kerr & William R. Kerr & William F. Lincoln, 2013. "Skilled Immigration and the Employment Structures of U.S. Firms," Harvard Business School Working Papers 14-040, Harvard Business School.
  6. Peri, Giovanni & Sparber, Chad, 2011. "Assessing inherent model bias: An application to native displacement in response to immigration," Journal of Urban Economics, Elsevier, vol. 69(1), pages 82-91, January.
  7. Slobodan Djajić & Alice Mesnard, 2013. "Guest Workers in the Underground Economy," IHEID Working Papers 15-2013, Economics Section, The Graduate Institute of International Studies.
  8. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2014. "The Impact of Internal Migration on Local Labour Markets in Thailand," Working Papers 2014-071, Department of Research, Ipag Business School.
  9. Slobodan Djajic & Alice Mesnard, 2013. "Guest Workers in the Underground Economy," CReAM Discussion Paper Series 1324, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  10. Djajic, S. & Mesnard, A., 2013. "Guest Workers in the Underground Economy," Working Papers 13/05, Department of Economics, City University London.
  11. Christoph Basten & Michael Siegenthaler, 2013. "Do immigrants take or create residents’ jobs? Quasi-experimental evidence from Switzerland," KOF Working papers 13-335, KOF Swiss Economic Institute, ETH Zurich.

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