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The Effect of Immigration along the Distribution of Wages

Author

Listed:
  • Christian Dustmann

    () (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

  • Tommaso Frattini

    () (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

  • Ian Preston

    () (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)

Abstract

This paper analyses the effect immigration has on wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find that immigration depresses wages below the 20th percentile of the wage distribution, but leads to slight wage increases in the upper part of the wage distribution. The overall wage effect of immigration is slightly positive. The positive wage effects we find are, although modest, too large to be explained by an immigration surplus. We suggest alternative explanations, based on the idea that immigrants are paid less than the value of what they contribute to production, generating therefore a surplus, and we assess the magnitude of these effects.

Suggested Citation

  • Christian Dustmann & Tommaso Frattini & Ian Preston, 2008. "The Effect of Immigration along the Distribution of Wages," CReAM Discussion Paper Series 0803, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:0803
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    References listed on IDEAS

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