The Fallacy of Crowding-Out: A Note on â€œNative Internal Migration and the Labor Market Impact of Immigrationâ€
In â€œNative Internal Migration and the Labor Market Impact of Immigration,â€ George Borjas (2006) identifies a strong negative correlation between immigration and native-born employment in the US using local area data. This relationship is particularly strong at the metropolitan area level, weaker but still significant at the state level, and weakest at the Census region level. In this note, we show that Borjasâ€™s negative correlation arises due to the construction of the dependent and explanatory variables rather than from any true negative association between the employment growth of immigrants and natives. Borjas regresses log native employment, ln(Nt), on the share of foreign-born employment, pt = Mt/(Mt + Nt), across skill-state-year cells. The specification therefore includes native employment in the numerator of the dependent variable and in the denominator of the explanatory variable. This builds a negative correlation into the model that is particularly strong if the variance of Nt relative to Mt is large. To illustrate, we first show that state and city level regressions of the standardized native employment change, (Nt+10âˆ’Nt)/(Mt+Nt), on standardized immigration, (Mt+10 âˆ’Mt)/(Mt+Nt), always find a positive and mostly significant correlation between the two. Second, we randomly simulate changes in the native and foreign-born workforce with a data generating process that has zero or positive correlation between the shocks Î”Mt and Î”Nt (i.e., so that immigration is associated with either no change or an increase in native employment). Borjas specifications employing this simulated data estimate large and significantly negative coefficients as long as the variance of Î”Nt is larger than the variance of Î”Mt, which is true in observed state-level and city-level data.
|Date of creation:||Jan 2008|
|Contact details of provider:|| Postal: 13 Oak Drive, Hamilton, NY 13346-1389|
Phone: (315) 228-7533
Fax: (315) 228-7033
Web page: http://www.colgate.edu/academics/departments-and-programs/economics
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- George J. Borjas, 2006.
"Native Internal Migration and the Labor Market Impact of Immigration,"
Journal of Human Resources,
University of Wisconsin Press, vol. 41(2).
- George J. Borjas, 2005. "Native Internal Migration and the Labor Market Impact of Immigration," NBER Working Papers 11610, National Bureau of Economic Research, Inc.
- George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1335-1374.
- George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:cgt:wpaper:2008-01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chad Sparber)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.