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Are Immigrants a Shot in the Arm for the Local Economy?

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Listed:
  • Gihoon Hong
  • John McLaren

Abstract

Most research on the effects of immigration focuses on the effects of immigrants as adding to the supply of labor. By contrast, this paper studies the effects of immigrants on local labor demand, due to the increase in consumer demand for local services created by immigrants. This effect can attenuate downward pressure from immigrants on non-immigrants' wages, and also benefit non-immigrants by increasing the variety of local services available. For this reason, immigrants can raise native workers' real wages, and each immigrant could create more than one job. Using US Census data from 1980 to 2000, we find considerable evidence for these effects: Each immigrant creates 1.2 local jobs for local workers, most of them going to native workers, and 62% of these jobs are in non-traded services. Immigrants appear to raise local non-tradables sector wages and to attract native-born workers from elsewhere in the country. Overall, it appears that local workers benefit from the arrival of more immigrants.

Suggested Citation

  • Gihoon Hong & John McLaren, 2015. "Are Immigrants a Shot in the Arm for the Local Economy?," NBER Working Papers 21123, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21123
    Note: ITI LS
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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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