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The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level

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  • Joan Llull

Abstract

I estimate the effect of immigration on wages of native male workers correcting for endogenous allocation of immigrants across education–experience cells. Exogenous variation is obtained from interactions of push factors, distance, and skill-cell dummies: distance mitigates the effect of push factors more severely for some skill groups. I propose a two-stage approach (Subsample 2SLS) that estimates the first stage regression with an augmented sample of destination countries and the second stage with a restricted subsample of interest. Asymptotic properties are discussed. Results show important OLS biases. For the United States and Canada, Subsample 2SLS elasticities average around minus one, very stable across alternative specifications and different instruments.

Suggested Citation

  • Joan Llull, 2018. "The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level," Journal of Human Resources, University of Wisconsin Press, vol. 53(3), pages 608-662.
    • Handle: RePEc:uwp:jhriss:v:53:y:2018:i:3:p:608-662
    Note: DOI: 10.3368/jhr.53.3.0315-7032R2
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    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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