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The Effect of Immigration along the Distribution of Wages

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  • Christian Dustmann

    ()
    (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

  • Tommaso Frattini

    ()
    (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

  • Ian Preston

    ()
    (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

Abstract

This paper analyses the effect immigration has on wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of 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 that 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. The overall wage effect of immigration is slightly positive. The positive wage effects we find are, although modest, too large to be explained by an immigration surplus. We suggest alternative explanations, based on the idea that immigrants are paid less than the value of what they contribute to production, generating therefore a surplus, and we assess the magnitude of these effects.

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Bibliographic Info

Paper 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 0803.

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Date of creation: Apr 2008
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Handle: RePEc:crm:wpaper:0803

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  1. Ottaviano, Gianmarco I. P. & Peri, Giovanni, 2007. "Rethinking the effects of immigration on wages," HWWI Research Papers 3-8, Hamburg Institute of International Economics (HWWI).
  2. 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.
  3. Ottaviano, Gianmarco Ireo Paolo & Peri, Giovanni, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the US," CEPR Discussion Papers 5226, C.E.P.R. Discussion Papers.
  4. Card, David, 2004. "Is the New Immigration Really So Bad?," IZA Discussion Papers 1119, Institute for the Study of Labor (IZA).
  5. 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.
  6. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
  7. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  8. 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.
  9. 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 0713, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  10. 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.
  11. John DiNardo & David Card, 2000. "Do Immigrant Inflows Lead to Native Outflows?," American Economic Review, American Economic Association, vol. 90(2), pages 360-367, May.
  12. 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.
  13. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
  14. 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.
  15. 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.
  16. 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.
  17. Manacorda, Marco & Manning, Alan & Wadsworth, Jonathan, 2006. "The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain," IZA Discussion Papers 2352, Institute for the Study of Labor (IZA).
  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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