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The EFFects of Immigration on the Scale and Composition of Demand: A study of California establishments

  • Francesca Mazzolari


    (Department of Economics of the University of California, Irvine)

  • David Numark


    (Department of Economics of the University of California, Irvine)

We study potential economic benefits of immigration stemming from two factors: first, that immigrants bring not only their labor supply with them, but also their consumption demands; and second, that immigrants may have a comparative advantage in the production of ethnic goods. Using data on the universe of business establishments located in California between 1992 and 2002 matched with Census of Population data, we find some evidence that immigrant inflows boost employment in the retail sector, which is non-traded and a non-intensive user of immigrant labor. We find that immigration is associated with fewer stand-alone retail stores, and a greater number of large and in particular big-box retailers – evidence that likely contradicts a diversityenhancing effect of immigration. On the other hand, focusing more sharply on the restaurant sector, for which we can better identify the types of products consumed by customers, the evidence indicates that immigration is associated with increased ethnic diversity of restaurants.

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Paper provided by Human Development Report Office (HDRO), United Nations Development Programme (UNDP) in its series Human Development Research Papers (2009 to present) with number HDRP-2009-33.

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Length: 47 pages
Date of creation: Aug 2009
Date of revision: Aug 2009
Publication status: Published as background research for the 2009 Human Development Report.
Handle: RePEc:hdr:papers:hdrp-2009-33
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