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Immigration and Production Technology

Author

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  • Ethan Lewis

    () (Department of Economics, Dartmouth College, Hanover, New Hampshire 03755, and National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

Research on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the long-run labor market impact of immigration. A level of capital-skill complementarity supported in studies both involving and not involving immigration alone reduces the relative wage impact of immigration by 40% compared to simulations with separable capital. Other models in which the production structure responds to skill-mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, also imply that the long-run impact of immigration on wages is smaller than predicted by the standard model. This article discusses new research that tries to credibly evaluate such models using immigration-induced variation in the skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.

Suggested Citation

  • Ethan Lewis, 2013. "Immigration and Production Technology," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 165-191, May.
  • Handle: RePEc:anr:reveco:v:5:y:2013:p:165-191
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080612-134132
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    Citations

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    Cited by:

    1. repec:eee:eecrev:v:96:y:2017:i:c:p:62-82 is not listed on IDEAS
    2. Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
    3. O'Rourke, Kevin Hjortshøj, 2018. "Economic history and contemporary challenges to globalization," CEPR Discussion Papers 13377, C.E.P.R. Discussion Papers.
    4. Giuseppe Arcangelis & Edoardo Porto & Gianluca Santoni, 2015. "Immigration and manufacturing in Italy: evidence from the 2000s," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 163-187, June.
    5. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr, 2018. "The Effects of Immigration in Developed Countries: Insights from Recent Economic Research," CEPII Policy Brief 2018-22, CEPII research center.
    6. Lafortune, Jeanne & Tessada, José & González-Velosa, Carolina, 2015. "More hands, more power? Estimating the impact of immigration on output and technology choices using early 20th century US agriculture," Journal of International Economics, Elsevier, vol. 97(2), pages 339-358.
    7. Sari Pekkala Kerr & William R. Kerr, 2016. "Immigrant Entrepreneurship," NBER Chapters,in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 187-249 National Bureau of Economic Research, Inc.
    8. De Arcangelis, Giuseppe & Di Porto, Edoardo & Santoni, Gianluca, 2015. "Migration, labor tasks and production structure," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 156-169.
    9. William R. Kerr, 2013. "U.S. High-Skilled Immigration, Innovation, and Entrepreneurship: Empirical Approaches and Evidence," NBER Working Papers 19377, National Bureau of Economic Research, Inc.
    10. Rowena Gray & Giulia Montresor & Greg C. Wright, 2017. "Processing Immigration Shocks: Firm Responses on the Innovation Margin," CESifo Working Paper Series 6624, CESifo Group Munich.
    11. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, Elsevier.
    12. Xie, Bin, 2017. "The Effects of Immigration Quotas on Wages, the Great Black Migration, and Industrial Development," IZA Discussion Papers 11214, Institute of Labor Economics (IZA).
    13. Mitaritonna, Cristina & Orefice, Gianluca & Peri, Giovanni, 2017. "Immigrants and firms’ outcomes: Evidence from France," European Economic Review, Elsevier, vol. 96(C), pages 62-82.
    14. repec:esx:essedp:752 is not listed on IDEAS

    More about this item

    Keywords

    capital-skill complementarity; choice of technique; innovation;

    JEL classification:

    • 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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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