The Effects of Immigration on U.S. Wages and Rents: A General Equilibrium Approach
AbstractIn this paper we document a strong positive correlation of immigration flows with changes in average wages and average house rents for native residents across U.S. states. Instrumental variables estimates reveal that the correlations are compatible with a causal interpretation from immigration to wages and rents of natives. Separating the effects of immigrants on natives of different schooling levels we find positive effects on the wages and rents of highly educated and small effects on the wages (negative) and rents (positive) of less educated. We propose a model where natives and immigrants of three different education levels interact in production in a central district and live in the surrounding region. In equilibrium the inflow of immigrants has a positive productive effect on natives due to complementarities in production as well as a positive competition effect on rents. The model calibrated and simulated with U.S.-states data matches most of the estimated effects of immigrants on wages and rents of natives in the period 1990-2005. This validation suggests the proposed model as a useful tool to evaluate the impacts of alternative immigration scenarios on U.S. wages and rents.
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Bibliographic InfoPaper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 0713.
Date of creation: Sep 2007
Date of revision:
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Wages; Rents; Housing Prices; U.S. States;
Other versions of this item:
- 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.
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-19 (All new papers)
- NEP-LAB-2008-01-19 (Labour Economics)
- NEP-MIG-2008-01-19 (Economics of Human Migration)
- NEP-URE-2008-01-19 (Urban & Real Estate Economics)
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