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

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Author Info
Patricia Cortes
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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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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  5. Francesca Mazzolari & David Neumark, 2009. "Beyond Wages: The Effects of Immigration on the Scale and Composition of Output," NBER Working Papers 14900, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Heinrich Hock & Delia Furtado, 2009. "Female Work and Fertility in the United States: Effects of Low-Skilled Immigrant Labor," Working papers 2009-20, University of Connecticut, Department of Economics. [Downloadable!]
  7. Kugler, Adriana & Yuksel, Mutlu, 2008. "Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch," IZA Discussion Papers 3670, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Katherine Cuff & Nicolas Marceau & Steeve Mongrain & Joanne Roberts, 2009. "Optimal Policies and the Informal Sector," Working Papers 2009-12, Department of Economics, University of Calgary, revised 10 Jan 2009. [Downloadable!]
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