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The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data

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  • Patricia Cortes
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    Abstract

    I exploit the large variation across U.S. cities and through time in the relative size of the low-skilled immigrant population to estimate the causal effect of immigration on prices of nontraded goods and services. Using an instrumental variables strategy, I find that, at current immigration levels, a 10 percent increase in the share of low-skilled immigrants in the labor force decreases the price of immigrant-intensive services, such as housekeeping and gardening, by 2 percent. Wage equations suggest that lower wages are a likely channel through which these effects take place. However, wage effects are significantly larger for low-skilled immigrants than for low-skilled natives, implying that the two are imperfect substitutes. (c) 2008 by The University of Chicago. All rights reserved..

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    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/589756
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 116 (2008)
    Issue (Month): 3 (06)
    Pages: 381-422

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    Handle: RePEc:ucp:jpolec:v:116:y:2008:i:3:p:381-422

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