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Immigrants' Complementarities and Native Wages: Evidence from California

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  • Giovanni Peri

Abstract

As of 2004 California employed almost 30% of all foreign born workers in the U.S. and was the state with the largest percentage of immigrants in the labor force. It received a very large number of uneducated immigrants so that two thirds of workers with no schooling degree in California were foreign-born in 2004. If immigration harms the labor opportunities of natives, especially the least skilled ones, California was the place where these effects should have been particularly strong. But is it possible that immigrants raised the demand for California's native workers, rather than harming it? After all immigrants have different skills and tend to work in different occupations then natives and hence they may raise productivity and the demand for complementary production tasks and skills. We consider workers of different education and age as imperfectly substitutable in production and we exploit differences in immigration across these groups to infer their impact on US natives. In order to isolate the "supply-driven" variation of immigrants across skills and to identify the labor market responses of natives we use a novel instrumental variable strategy. Our estimates use migration by skill group to other U.S. states as instrument for migration to California. Migratory flows to other states, in fact, share the same "push" factors as those to California but clearly are not affected by the California-specific "pull" factors. We find that between 1960 and 2004 immigration did not produce a negative migratory response from natives. To the contrary, as immigrants were imperfect substitutes for natives with similar education and age we find that they stimulated, rather than harmed, the demand and wages of most U.S. native workers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12956.

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Date of creation: Mar 2007
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Handle: RePEc:nbr:nberwo:12956

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  1. Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 29(1), pages 69-113, 01.
  2. Gianmarco I. P. Ottaviano & Giovanni Peri, 2012. "Rethinking The Effect Of Immigration On Wages," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 10(1), pages 152-197, 02.
  3. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers, National Bureau of Economic Research, Inc 9755, National Bureau of Economic Research, Inc.
  4. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(2), pages 705-746, May.
  5. Joshua D. Angrist, 1995. "The Economic Returns to Schooling in the West Bank and Gaza Strip," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 95-5, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Christian Dustmann & Francesca Fabbri & Ian Preston, 2011. "Racial Harassment, Ethnic Concentration, and Economic Conditions," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 113(3), pages 689-711, 09.
  7. George J. Borjas, 2005. "Native Internal Migration and the Labor Market Impact of Immigration," NBER Working Papers, National Bureau of Economic Research, Inc 11610, National Bureau of Economic Research, Inc.
  8. David Card & Ethan G. Lewis, 2005. "The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts," NBER Working Papers, National Bureau of Economic Research, Inc 11552, National Bureau of Economic Research, Inc.
  9. Abdurrahman Aydemir & George J. Borjas, 2006. "A Comparative Analysis of the Labor Market Impact of International Migration: Canada, Mexico, and the United States," NBER Working Papers, National Bureau of Economic Research, Inc 12327, National Bureau of Economic Research, Inc.
  10. George J. Borjas, 2006. "Native Internal Migration and the Labor Market Impact of Immigration," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 41(2).
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