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Human Capital, Amenities, and Distortions: The Immigrant Earnings Gap across Space

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  • Gabriele Lucchetti

Abstract

I document that the city-size earnings premium is smaller for immigrants than for natives, driven by low-income-country immigrants, who sort less into cognitive occupations in larger cities. I interpret these facts through a spatial equilibrium model with heterogeneous human capital, amenities, and local earnings wedges. Local earnings wedges are the main channel behind the immigrant-native gap in the city-size earnings premium. Removing all immigrant-native differences closes 62 percent of the immigrant-native earnings gap but widens the spatial earnings gap by 20 percent. Expanding college immigration narrows the workers' earnings gap without widening the spatial earnings gap.

Suggested Citation

  • Gabriele Lucchetti, 2026. "Human Capital, Amenities, and Distortions: The Immigrant Earnings Gap across Space," RFBerlin Discussion Paper Series 26082, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26082
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    References listed on IDEAS

    as
    1. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    2. David Albouy, 2008. "Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas," NBER Working Papers 14472, National Bureau of Economic Research, Inc.
    3. Philip Oreopoulos, 2011. "Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 148-171, November.
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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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