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Immigration Accounting: U.S. States 1960-2006

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  • Giovanni Peri

    ()
    (UC Davis and NBER)

Abstract

Different U.S. states have been affected by immigration to very different extents in recent years. Immigration increases available workers in a state economy and, because of its composition across education groups, it also increases the relative supply of less educated workers. However, immigration is more than a simple labor supply shock. It brings differentiated skills and more competition to the labor market and it may induce efficient specialization and affect the choice of techniques. Immigrants also affect investments, capital accumulation, and the productivity of more and less educated workers. Using a production function-based procedure and data on gross state product, physical capital and hours worked we analyze the impact of immigration on production factors (capital, more and less educated labor), and productivity over the period 1960-2006 for 50 U.S. states plus D.C. We apply growth accounting techniques to the panel of states in order to identify the changes in factors and productivity associated with immigration. To identify a causal impact we use the part of immigration that is determined by supply shifts in countries of origin and the geographical location of U.S. states or historical immigrants' settlements. We find that immigration significantly increased the relative supply of less educated workers, that it did not affect much the level of capital per worker and that it significantly increased the productivity of highly educated workers and, even more, less educated workers. These channels together explain the small effect of immigrants on wages of less educated workers and the significant positive effects on wages of more educated workers.

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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 0805.

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Date of creation: Jul 2008
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Handle: RePEc:crm:wpaper:0805

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  1. Adriana Kugler & Mutlu Yuksel, 2008. "Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch," CReAM Discussion Paper Series 0809, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-45, March.
  3. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
  4. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  5. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  6. 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.
  7. Ethan Lewis, 2005. "Immigration, skill mix, and the choice of technique," Working Papers 05-8, Federal Reserve Bank of Philadelphia.
  8. David Card & Ethan G. Lewis, 2007. "The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts," NBER Chapters, in: Mexican Immigration to the United States, pages 193-228 National Bureau of Economic Research, Inc.
  9. 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.
  10. Gasper A. Garofalo & Steven Yamarik, 2002. "Regional Convergence: Evidence From A New State-By-State Capital Stock Series," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 316-323, May.
  11. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
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Cited by:
  1. Bernt Bratsberg & Oddbjorn Raaum, 2010. "Immigration and Wages: Evidence from Construction," CReAM Discussion Paper Series 1006, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.

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