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Assessing inherent model bias: An application to native displacement in response to immigration

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  • Peri, Giovanni
  • Sparber, Chad

Abstract

There is a long-standing debate among academics about the effect of immigration on native internal migration decisions. If immigrants displace natives this may indicate a direct cost of immigration in the form of decreased employment opportunity for native workers. Moreover, displacement would also imply that cross-region analyses of wage effects systematically underestimate the consequences of immigration. The widespread use of such area studies for the US and other countries makes it especially important to know whether a native internal response to immigration truly occurs. This paper introduces a microsimulation methodology to test for inherent bias in regression models that have been used in the literature. We show that some specifications have built biases into their models, thereby casting doubt on the validity of their results. We then provide a brief empirical analysis with a panel of observed US state-by-skill data. Together, our evidence argues against the existence of native displacement. This implies that cross-region analyses of immigration's effect on wages are still informative.

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Bibliographic Info

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

Volume (Year): 69 (2011)
Issue (Month): 1 (January)
Pages: 82-91

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Handle: RePEc:eee:juecon:v:69:y:2011:i:1:p:82-91

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Immigration Microsimulation Native displacement Internal migration Crowding out Employment effects Model bias;

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References

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  1. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration, and Wages," American Economic Journal: Applied Economics, American Economic Association, American Economic Association, vol. 1(3), pages 135-69, July.
  2. David Card, 1996. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 747, Princeton University, Department of Economics, Industrial Relations Section..
  3. David Card, 2007. "How Immigration Affects U.S. Cities," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 0711, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Longhi, Simonetta & Nijkamp, Peter & Poot, Jacques, 2008. "Meta-Analysis of Empirical Evidence on the Labour Market Impacts of Immigration," IZA Discussion Papers 3418, Institute for the Study of Labor (IZA).
  5. Ottaviano, Gianmarco Ireo Paolo & Peri, Giovanni, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6916, C.E.P.R. Discussion Papers.
  6. David Card, 2009. "Immigration and Inequality," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 0907, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  7. George J. Borjas, 1980. "The Relationship between Wages and Weekly Hours of Work: The Role of Division Bias," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 15(3), pages 409-423.
  8. Ethan Lewis, 2005. "Immigration, Skill Mix, and the Choice of Technique," Working Papers, Center for Economic Studies, U.S. Census Bureau 05-04, Center for Economic Studies, U.S. Census Bureau.
  9. David Card, 2005. "Is the New Immigration Really So Bad?," NBER Working Papers 11547, National Bureau of Economic Research, Inc.
  10. Gianmarco I.P. Ottaviano & Giovanni Peri, 2007. "The Effects of Immigration on U.S. Wages and Rents: A General Equilibrium Approach," CReAM Discussion Paper Series, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London 0713, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  11. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  12. Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, Annual Reviews, vol. 1(1), pages 179-208, 05.
  13. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(3), pages 381-422, 06.
  14. David Card & Ethan G. Lewis, 2007. "The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts," NBER Chapters, National Bureau of Economic Research, Inc, in: Mexican Immigration to the United States, pages 193-228 National Bureau of Economic Research, Inc.
  15. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, Elsevier, vol. 84(1), pages 1-14, May.
  16. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  17. George J. Borjas, 2006. "Native Internal Migration and the Labor Market Impact of Immigration," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 41(2).
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Citations

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Cited by:
  1. Martin Halla & Alexander F. Wagner & Josef Zweimüller, 2012. "Does Immigration into Their Neighborhoods Incline Voters Toward the Extreme Right? The Case of the Freedom Party of Austria," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2012-05, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Giulia Faggio & Henry G. Overman, 2012. "The Effect of Public Sector Employment on Local Labour Markets," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0111, Spatial Economics Research Centre, LSE.
  3. Rosa Sanchis-Guarner, 2014. "First-Come First-Served: Identifying the Demand Effect of Immigration Inflows on House Prices," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0160, Spatial Economics Research Centre, LSE.
  4. Wozniak, Abigail & Murray, Thomas J., 2012. "Timing is everything: Short-run population impacts of immigration in US cities," Journal of Urban Economics, Elsevier, Elsevier, vol. 72(1), pages 60-78.
  5. Sara de la Rica & Albretch Glitz & Francesc Ortega, 2013. "Immigration in Europe: Trends, Policies and Empirical Evidence," Working Papers, FEDEA 2013-16, FEDEA.
  6. Christoph Basten & Michael Siegenthaler, 2013. "Do immigrants take or create residents’ jobs? Quasi-experimental evidence from Switzerland," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 13-335, KOF Swiss Economic Institute, ETH Zurich.
  7. Otto, Alkis Henri & Steinhardt, Max Friedrich, 2012. "Immigration and election outcomes: Evidence from city districts in Hamburg," Working Paper Series, Hamburg School of Business Administration (HSBA) 02/2012, Hamburg School of Business Administration (HSBA).
  8. Forlani, Emanuele & Lodigiani, Elisabetta & Mendolicchio, Concetta, 2013. "The impact of low-skilled immigration on female labour supply," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201320, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  9. 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, Verein für Socialpolitik / German Economic Association 79780, Verein für Socialpolitik / German Economic Association.
  10. Martin Halla & Alexander F. Wagner & Josef Zweimüller, 2012. "Immigration and voting for the extreme right," ECON - Working Papers, Department of Economics - University of Zurich 083, Department of Economics - University of Zurich, revised Oct 2013.
  11. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, Elsevier, vol. 84(1), pages 1-14, May.
  12. Brücker, Herbert & Hauptmann, Andreas & Jahn, Elke J. & Upward, Richard, 2014. "Migration and imperfect labor markets: Theory and cross-country evidence from Denmark, Germany and the UK," European Economic Review, Elsevier, Elsevier, vol. 66(C), pages 205-225.

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