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The Impact of Immigration on Native Poverty through Labor Market Competition

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  • Giovanni Peri

Abstract

In this paper I first analyze the wage effects of immigrants on native workers in the US economy and its top immigrant-receiving states and metropolitan areas. Then I quantify the consequences of these wage effects on the poverty rates of native families. The goal is to establish whether the labor market effects of immigrants have significantly affected the percentage of "poor" families among U.S.-born individuals. I consider the decade 2000-2009 during which poverty rates increased significantly in the U.S. As a reference, I also analyze the decade 1990-2000. To calculate the wage impact of immigrants I adopt a simple general equilibrium model of productive interactions, regulated by the elasticity of substitution across schooling groups, age groups and between US and foreign-born workers. Considering the inflow of immigrants by age, schooling and location I evaluate their impact in local markets (cities and states) assuming no mobility of natives and on the US market as a whole allowing for native internal mobility. Our findings show that for all plausible parameter values there is essentially no effect of immigration on native poverty at the national level. At the local level, only considering the most extreme estimates and only in some localities, we find non-trivial effects of immigration on poverty. In general, however, even the local effects of immigration bear very little correlation with the observed changes in poverty rates and they explain a negligible fraction of them.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17570.

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Date of creation: Nov 2011
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Publication status: published as “The Labor Market Impact of Immigration on Native Poverty” forthcoming in "Immigration, Poverty, and Socioeconomic Inequality", edited by David Card and Steve Raphael, Russel Sage Foundation, 2013.
Handle: RePEc:nbr:nberwo:17570

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References

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  1. Susana Iranzo & Giovanni Peri, 2009. "Migration and Trade: Theory with an Application to the Eastern-Western European Integration," Working Papers 97, University of California, Davis, Department of Economics.
  2. Katz, Lawrence F & Murphy, Kevin M, 1992. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 35-78, February.
  3. Enrico Moretti, 2002. "Estimating the Social Return to Higher Education: Evidence From Longitudinal and Repeated Cross-Sectional Data," NBER Working Papers 9108, National Bureau of Economic Research, Inc.
  4. David Card, 2009. "Immigration and Inequality," American Economic Review, American Economic Association, vol. 99(2), pages 1-21, May.
  5. Joshua D. Angrist, 1995. "The Economic Returns to Schooling in the West Bank and Gaza Strip," Working papers 95-5, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. George J. Borjas & Lawrence F. Katz, 2007. "The Evolution of the Mexican-Born Workforce in the United States," NBER Chapters, in: Mexican Immigration to the United States, pages 13-56 National Bureau of Economic Research, Inc.
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Cited by:
  1. Joo, Myungkook, 2013. "Explaining heterogeneity in the child poverty rate among immigrant families: Differences by parental citizenship," Children and Youth Services Review, Elsevier, vol. 35(4), pages 668-677.

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