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Immigration, Wages, and Education: A Labor Market Equilibrium Structural Model

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  • Joan Llull

Abstract

This paper analyzes the effect of immigration on wages taking into account human capital and labor supply adjustments. Using U.S. micro-data for 1967-2007, I estimate a labor market equilibrium model that includes endogenous decisions on education, participation, and occupation, and allows for skill-biased technical change. Results suggest important labor market adjustments that mitigate the effect of immigration on wages. These adjustments include career switches, labor market detachment and changes in schooling decisions, and are heterogeneous across the workforce. The adjustments generate substantial self-selection biases at the lower tail of the wage distribution that are corrected by the estimated model.

Suggested Citation

  • Joan Llull, 2013. "Immigration, Wages, and Education: A Labor Market Equilibrium Structural Model," Working Papers 711, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:711
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    References listed on IDEAS

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    1. Sumru Altuğ & Robert A. Miller, 1998. "The Effect of Work Experience on Female Wages and Labour Supply," Review of Economic Studies, Oxford University Press, vol. 65(1), pages 45-85.
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    Cited by:

    1. Christian Dustmann & Uta Schönberg & Jan Stuhler, 2017. "Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 435-483.
    2. Hunt, Jennifer, 2012. "The Impact of Immigration on the Educational Attainment of Natives," IZA Discussion Papers 6904, Institute for the Study of Labor (IZA).
    3. Brunello, Giorgio & Lodigiani, Elisabetta & Rocco, Lorenzo, 2017. "Does Low Skilled Immigration Cause Human Capital Polarization? Evidence from Italian Provinces," IZA Discussion Papers 11062, Institute for the Study of Labor (IZA).
    4. George J. Borjas & Kirk B. Doran, 2015. "Cognitive Mobility: Labor Market Responses to Supply Shocks in the Space of Ideas," Journal of Labor Economics, University of Chicago Press, vol. 33(S1), pages 109-145.
    5. de la Rica, Sara & Glitz, Albrecht & Ortega, Francesc, 2013. "Immigration in Europe: Trends, Policies and Empirical Evidence," IZA Discussion Papers 7778, Institute for the Study of Labor (IZA).
    6. Ortega, Javier & Verdugo, Gregory, 2016. "Moving Up or Down? Immigration and the Selection of Natives across Occupations and Locations," IZA Discussion Papers 10303, Institute for the Study of Labor (IZA).
    7. Ortega, Javier & Verdugo, Gregory, 2015. "The impact of immigration on the local labor market outcomes of blue collar workers: panel data evidence," LSE Research Online Documents on Economics 61073, London School of Economics and Political Science, LSE Library.
    8. Peter McHenry, 2015. "Immigration and the Human Capital of Natives," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 34-71.
    9. Christoph Albert, 2017. "The Labor Market Impact of Undocumented Immigrants: Job Creation vs. Job Competition," CESifo Working Paper Series 6575, CESifo Group Munich.
    10. 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.
    11. Farré, Lídia & Ortega, Francesc & Tanaka, Ryuichi, 2015. "Immigration and School Choices in the Midst of the Great Recession," IZA Discussion Papers 9234, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Immigration; wages; human capital; labor supply; dynamic discrete choice; labor market equilibrium;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • 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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