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Labor Market Competition and the Assimilation of Immigrants

Author

Listed:
  • Christoph Albert
  • Albrecht Glitz
  • Joan Llull

Abstract

This paper shows that the wage assimilation of immigrants is the result of the intricate interplay between individual skill accumulation and dynamic labor market equilibrium effects. When immigrants and natives are imperfect substitutes, rising immigrant inflows widen the wage gap between them. Using a production function framework in which workers supply both general and host-country-specific skills, we show that this labor market competition channel explains about one-fifth of the large increase in the average immigrant–native wage gap across arrival cohorts in the United States since the 1960s. The results further reveal substantial heterogeneity across different groups of immigrants.

Suggested Citation

  • Christoph Albert & Albrecht Glitz & Joan Llull, 2026. "Labor Market Competition and the Assimilation of Immigrants," American Economic Review, American Economic Association, vol. 116(5), pages 1682-1722, May.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:5:p:1682-1722
    DOI: 10.1257/aer.20220865
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    Citations

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    Cited by:

    1. is not listed on IDEAS
    2. Silliman, Mikko & Willén, Alexander, 2024. "Worker Power, Immigrant Sorting, and Firm Dynamics," Discussion Paper Series in Economics 13/2024, Norwegian School of Economics, Department of Economics.
    3. Silke Anger & Jacopo Bassetto & Malte Sandner, 2024. "Lifting Barriers to Skill Transferability: Immigrant Integration through Occupational Recognition," Development Working Papers 498, Centro Studi Luca d'Agliano, University of Milano.
    4. Regina T. Riphahn & Irakli Sauer, 2024. "Earnings Assimilation of Post-Reunification East German Migrants in West Germany," CESifo Working Paper Series 11233, CESifo.
    5. Chassamboulli, Andri & Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro, 2024. "Immigration and labour market flows," Labour Economics, Elsevier, vol. 86(C).
    6. García-Suaza, Andrés & Gallego, Juan Miguel & Mayorga, Juan D. & Mondragón-Mayo, Angie & Sepúlveda, Carlos & Sarango Iturralde, Alexander, 2022. "COVID-19 and assimilation: an analysis of immigration from Venezuelan in Colombia," Working papers 99, Red Investigadores de Economía.
    7. Joan Llull, 2021. "Immigration and Gender Differences in the Labor Market," Journal of Human Capital, University of Chicago Press, vol. 15(1), pages 174-203.
    8. Valentine Madzudzo & Prof. Dieter von Fintel & Dr. Mamello Nchake, "undated". "Immigrant Special Visas and Local Employment: evidence from South African metropoles," ERSA Working Paper Series v::y:2025:i::id:170, Economic Research Southern Africa.
    9. Arellano-Bover, Jaime & San, Shmuel, 2023. "The Role of Firms and Job Mobility in the Assimilation of Immigrants: Former Soviet Union Jews in Israel 1990–2019," IZA Discussion Papers 16389, IZA Network @ LISER.
    10. Paul Berbée & Jan Stuhler, 2025. "The integration of migrants in the German labour market: evidence over 50 years," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 40(122), pages 481-549.
    11. Christian Dustmann & Hyejin Ku & Tetyana Surovtseva, 2024. "Real Exchange Rates and the Earnings of Immigrants," The Economic Journal, Royal Economic Society, vol. 134(657), pages 271-294.
    12. Serdar Birinci & Fernando Leibovici & Kurt See, 2021. "The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries," Working Papers 2021-004, Federal Reserve Bank of St. Louis, revised 16 Jun 2025.
    13. Lucchetti, Gabriele & Ruggieri, Alessandro, 2025. "Unlucky migrants: Scarring effect of recessions on the assimilation of the foreign born," Labour Economics, Elsevier, vol. 92(C).
    14. Serdar Birinci & Fernando Leibovici & Kurt See, 2021. "Immigrant Misallocation," LIS Working papers 809, LIS Cross-National Data Center in Luxembourg.
    15. Illing, Hannah & Koch, Theresa, 2021. "Who Suffers the Greatest Loss? Costs of Job Displacement for Migrants and Natives," IAB-Discussion Paper 202108, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Glitz, Albrecht & Rapoport, Hillel, 2024. "Introduction to the Labour Economics special issue on immigration economics," Labour Economics, Elsevier, vol. 87(C).
    17. Bonin Holger & Rinne Ulf, 2025. "Aktive Arbeitsmarktpolitik hat Integration der Geflüchteten nachhaltig verbessert," Wirtschaftsdienst, Sciendo, vol. 105(9), pages 622-627.

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • K37 - Law and Economics - - Other Substantive Areas of Law - - - Immigration Law
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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