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The effect of immigration on output mix, capital, and productivity

  • Myriam Quispe-Agnoli
  • Madeline Zavodny

The growing influx of immigrants into the United States has prompted concerns about potential negative effects on native workers, especially the less skilled. Such concerns have not been borne out by many studies of the effect of immigration on wages. However, the typical theoretical negative effect of immigration flows on wages may be offset by changes in other aspects of the economy, including output mix, productivity, and capital. ; This article examines the relationship between immigration and three factors-output mix, labor productivity, and capital-in the skilled and unskilled sectors in the U.S. manufacturing sector at the state level. The authors develop a simple two-sector model of the effect of immigration on these three factors. The authors then test the model's predictions using data from the 1982 and 1992 Census of Manufactures and other sources. ; The results indicate that immigration-induced changes in labor supply caused labor productivity in both the low- and high-skilled sectors to increase more slowly in states that attracted a larger share of immigrants during the 1980s than in other states. This slower growth may result from the gradual assimilation process many immigrants undergo as they acquire language skills and familiarity with U.S. institutions, the authors believe, and they call for further study of immigration's longer-term effects on productivity.

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Article provided by Federal Reserve Bank of Atlanta in its journal Economic Review.

Volume (Year): (2002)
Issue (Month): Q1 ()
Pages: 17-27

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Handle: RePEc:fip:fedaer:y:2002:i:q1:p:17-27:n:v.87no.1
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  1. Madeline Zavodny, 1998. "Determinants of recent immigrants' locational choices," FRB Atlanta Working Paper No. 98-3, Federal Reserve Bank of Atlanta.
  2. Chiswick, Carmel U. & Chiswick, Barry R. & Karras, Georgios, 1992. "The impact of immigrants on the macroeconomy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 37(1), pages 279-316, December.
  3. 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.
  4. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  5. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  6. 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.
  7. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
  8. Gandal, Neil & Hanson, Gordon H. & Slaughter, M.J.Matthew J., 2004. "Technology, trade, and adjustment to immigration in Israel," European Economic Review, Elsevier, vol. 48(2), pages 403-428, April.
  9. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  10. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 201-234 National Bureau of Economic Research, Inc.
  11. 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.
  12. Gordon H. Hanson & Matthew J. Slaughter, 1999. "The Rybczynski Theorem, Factor-Price Equalization, and Immigration: Evidence from U.S. States," NBER Working Papers 7074, National Bureau of Economic Research, Inc.
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