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Immigration Accounting: U.S. States 1960-2006

Author

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  • Giovanni Peri

    () (UC Davis and NBER)

Abstract

Different U.S. states have been affected by immigration to very different extents in recent years. Immigration increases available workers in a state economy and, because of its composition across education groups, it also increases the relative supply of less educated workers. However, immigration is more than a simple labor supply shock. It brings differentiated skills and more competition to the labor market and it may induce efficient specialization and affect the choice of techniques. Immigrants also affect investments, capital accumulation, and the productivity of more and less educated workers. Using a production function-based procedure and data on gross state product, physical capital and hours worked we analyze the impact of immigration on production factors (capital, more and less educated labor), and productivity over the period 1960-2006 for 50 U.S. states plus D.C. We apply growth accounting techniques to the panel of states in order to identify the changes in factors and productivity associated with immigration. To identify a causal impact we use the part of immigration that is determined by supply shifts in countries of origin and the geographical location of U.S. states or historical immigrants' settlements. We find that immigration significantly increased the relative supply of less educated workers, that it did not affect much the level of capital per worker and that it significantly increased the productivity of highly educated workers and, even more, less educated workers. These channels together explain the small effect of immigrants on wages of less educated workers and the significant positive effects on wages of more educated workers.

Suggested Citation

  • Giovanni Peri, 2008. "Immigration Accounting: U.S. States 1960-2006," CReAM Discussion Paper Series 0805, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:0805
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    File URL: http://www.cream-migration.org/publ_uploads/CDP_05_08.pdf
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    References listed on IDEAS

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    1. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
    2. Adriana Kugler & Mutlu Yuksel, 2008. "Effects of Low-Skilled Immigration on U.S. Natives: Evidence from Hurricane Mitch," NBER Working Papers 14293, National Bureau of Economic Research, Inc.
    3. Ethan Lewis, 2005. "Immigration, Skill Mix, and the Choice of Technique," Working Papers 05-04, Center for Economic Studies, U.S. Census Bureau.
    4. David Card & Ethan G. Lewis, 2007. "The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts," NBER Chapters,in: Mexican Immigration to the United States, pages 193-228 National Bureau of Economic Research, Inc.
    5. 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.
    6. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
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    8. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
    9. David Card, 2007. "How Immigration Affects U.S. Cities," CReAM Discussion Paper Series 0711, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    10. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
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    Cited by:

    1. Martin Kahanec & Mariola Pytliková, 2017. "The economic impact of east–west migration on the European Union," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(3), pages 407-434, August.
    2. Bernt Bratsberg & Oddbjørn Raaum, 2012. "Immigration and Wages: Evidence from Construction," Economic Journal, Royal Economic Society, vol. 122(565), pages 1177-1205, December.

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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