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Searching for the Effect of Immigration on the Labor Market

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  • George J. Borjas
  • Richard B. Freeman
  • Lawrence F. Katz

Abstract

We compare two approaches to analyzing the effects of immigration on the labor market and find that the estimated effect of immigration on U.S. native labor outcomes depends critically on the empirical experiment used. Area analyses contrast the level or change in immigration by area with the level or change in the outcomes of non- immigrant workers. Factor proportions analyses treat immigrants as a source of increased national supply of workers of the relevant skill. Cross-section comparisons of wages and immigration in the 1980 and 1990 Censuses yield unstable results casting doubt on the validity of these calculations. Analyses of changes over time for various education groups within regions give negative estimated immigration effects, which increase in magnitude the wider the area covered. Factor proportions calculations show that immigration was somewhat important in reducing the relative pay of U.S. high school dropouts during the 1980s, while immigration and trade contributed much more modestly to the falling pay of high school equivalent workers. The different effects of immigration on native outcomes in the area and factor proportions methodologies appear to result from the diluting effect of native migration flows across regions and failure to take adequate account of other regional labor market conditions in area comparisons.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5454.

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Date of creation: Feb 1996
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Publication status: published as American Economic Review, 86, pp.246-251, May 1996.
Handle: RePEc:nbr:nberwo:5454

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  1. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, July.
  2. Randall Filer, 1992. "The Effect of Immigrant Arrivals on Migratory Patterns of Native Workers," NBER Chapters, in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 245-270 National Bureau of Economic Research, Inc.
  3. Borjas, G.J. & Freeman, R.B. & Katz, L.F., 1991. "On The Labor Market Effects Of Immigration And Trade," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1556, Harvard - Institute of Economic Research.
  4. John M. Abowd, 1991. "Appendix: The NBER Immigration, Trade, and Labor Markets Data Files," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 407-421 National Bureau of Economic Research, Inc.
  5. Joseph Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 636, Princeton University, Department of Economics, Industrial Relations Section..
  6. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 32(4), pages 1667-1717, December.
  7. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  8. Joseph G. Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcomes of Natives," NBER Working Papers 3123, National Bureau of Economic Research, Inc.
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