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The Effect of Immigration along the Distribution of Wages

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  • Christian Dustmann
  • Tommaso Frattini
  • Ian P. Preston

Abstract

This paper analyses the effect immigration has on the wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of native wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find a pattern of effects whereby immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution. This pattern mirrors the evidence on the location of immigrants in the wage distribution. We suggest that possible explanations for the overall slightly positive effect on native wages, besides standard immigration surplus arguments, could involve deviations of immigrant remuneration from contribution to production either because of initial mismatch or immigrant downgrading. Copyright , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Review of Economic Studies.

Volume (Year): 80 (2013)
Issue (Month): 1 ()
Pages: 145-173

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Handle: RePEc:oup:restud:v:80:y:2013:i:1:p:145-173

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  1. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, July.
  2. Gianmarco I.P. Ottaviano & Giovanni Peri, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," NBER Working Papers 11672, National Bureau of Economic Research, Inc.
  3. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages F300-F323, November.
  4. Giovanni Peri & Gianmarco I.P. Ottaviano, 2006. "Rethinking the Effects of Immigration on Wages," Working Papers 634, University of California, Davis, Department of Economics.
  5. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394 Elsevier.
  6. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia.
  7. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
  8. Patricia Cort�s & Jos� Tessada, 2011. "Low-Skilled Immigration and the Labor Supply of Highly Skilled Women," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 88-123, July.
  9. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2006. "The impact of immigration on the structure of male wages: theory and evidence from Britain," LSE Research Online Documents on Economics 19797, London School of Economics and Political Science, LSE Library.
  10. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  11. Ottaviano, Gianmarco Ireo Paolo & Peri, Giovanni, 2007. "The Effects of Immigration on US Wages and Rents: A General Equilibrium Approach," CEPR Discussion Papers 6551, C.E.P.R. Discussion Papers.
  12. 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.
  13. 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, vol. 28(1), pages 1-90.
  14. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
  15. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
  16. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
  17. Christian Dustmann & Francesca Fabbri & Ian Preston, 2005. "The Impact of Immigration on the British Labour Market," Economic Journal, Royal Economic Society, vol. 115(507), pages F324-F341, November.
  18. 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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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Migrant labour & British jobs
    by chris dillow in Stumbling and Mumbling on 2009-02-03 12:10:34
  2. Immigration, class & ideology
    by chris dillow in Stumbling and Mumbling on 2013-06-29 12:52:28
  3. Immigration, Class, & Ideology
    by Mark Thoma in Economist's View on 2013-06-30 16:36:50
  4. Cutting waste
    by chris dillow in Stumbling and Mumbling on 2013-07-16 13:32:19
  5. Labour's cost of living problem
    by chris dillow in Stumbling and Mumbling on 2013-08-24 11:11:51
  6. "British workers hit hard"
    by chris dillow in Stumbling and Mumbling on 2014-04-22 13:28:12
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