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The Impact of Immigration: Why Do Studies Reach Such Different Results?

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  • Christian Dustmann
  • Uta Schönberg
  • Jan Stuhler

Abstract

We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants. "Downgrading" occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin. We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.

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  • Christian Dustmann & Uta Schönberg & Jan Stuhler, 2016. "The Impact of Immigration: Why Do Studies Reach Such Different Results?," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 31-56, Fall.
  • Handle: RePEc:aea:jecper:v:30:y:2016:i:4:p:31-56
    Note: DOI: 10.1257/jep.30.4.31
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    Cited by:

    1. Genicot, Garance & Mayda, Anna Maria & Mendola, Mariapia, 2016. "The Impact of Migration on Child Labor: Theory and Evidence from Brazil," IZA Discussion Papers 10444, Institute for the Study of Labor (IZA).
    2. Stefania Borelli & Giuseppe De Arcangelis, 2016. "Migration, Labor Tasks and Production Structure in Europe," Working Papers 4/16, Sapienza University of Rome, DISS.
    3. repec:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-017-0064-4 is not listed on IDEAS
    4. repec:eee:eecrev:v:101:y:2018:i:c:p:101-132 is not listed on IDEAS
    5. Hausmann, Ricardo & Nedelkoska, Ljubica, 2017. "Welcome Home in a Crisis: Effects of Return Migration on the Non-Migrants’ Wages and Employment," Working Paper Series rwp17-015, Harvard University, John F. Kennedy School of Government.
    6. Becker, Sascha O. & Grosfeld, Irena & Grosjean, Pauline & Voigtländer, Nico & Zhuravskaya, Ekaterina, 2018. "Forced Migration and Human Capital: Evidence from Post-WWII Population Transfers," CEPR Discussion Papers 12975, C.E.P.R. Discussion Papers.
    7. Ljubica Nedelkoska & Ricardo Hausmann, 2017. "Welcome Home in a Crisis: Effects of Return Migration on the Non-migrants' Wages and Employment," CID Working Papers 330, Center for International Development at Harvard University.
    8. Ivan Etzo & Carla Massidda & Paolo Mattana & Romano Piras, 2017. "The impact of immigration on output and its components: a sectoral analysis for Italy at regional level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 533-564, December.
    9. Alexander Patt & Jens Ruhose & Simon Wiederhold & Miguel Flores, 2017. "International Emigrant Selection on Occupational Skills," CESifo Working Paper Series 6527, CESifo Group Munich.
    10. Cebreros Zurita Carlos Alfonso;Chiquiar Daniel;Roa Mónica;Tobal Martín, 2017. "Notes to Understand Migration Policy with International Trade Theoretical Tools," Working Papers 2017-03, Banco de México.
    11. Stefan Seifert & Marica Valente, 2018. "An Offer that you Can't Refuse? Agrimafias and Migrant Labor on Vineyards in Southern Italy," Discussion Papers of DIW Berlin 1735, DIW Berlin, German Institute for Economic Research.
    12. Timothy J Hatton & Zachary Ward, 2018. "International Migration in the Atlantic Economy 1850 - 1940," CEH Discussion Papers 02, Centre for Economic History, Research School of Economics, Australian National University.

    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • 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

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