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Immigration, Wages, and Education: a Labor Market Equilibrium Structural Model

Listed author(s):
  • Joan Llull

    (Universitat Autonoma de Barcelona, MOVE, and Barcelona GSE)

This paper analyzes the effect of immigration on wages taking into account human capital adjustments by natives and previous immigrants. To this end, I propose and estimate a labor market equilibrium structural model. On the labor supply side, individuals make endogenous decisions on education, participation, and occupation. On the demand side, an aggregate firm uses a technology that combines labor skill units with capital to produce a single output, and accounts for skill-biased technical change. I estimate the model using U.S. micro-data for 1967-2007. Results suggest that immigration reduced wages considerably even though natives adjusted their human capital and labor supply behavior to compensate for the change in skill prices.

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File URL: https://economicdynamics.org/meetpapers/2012/paper_366.pdf
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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 366.

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Date of creation: 2012
Handle: RePEc:red:sed012:366
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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  1. Victor Aguirregabiria & Pedro Mira, 2002. "Swapping the Nested Fixed Point Algorithm: A Class of Estimators for Discrete Markov Decision Models," Econometrica, Econometric Society, vol. 70(4), pages 1519-1543, July.
  2. 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.
  3. Eckstein, Zvi & Weiss, Yoram, 2003. "On the Wage Growth of Immigrants: Israel, 1990-2000," IZA Discussion Papers 710, Institute for the Study of Labor (IZA).
  4. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  5. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers 252, Centro Studi Luca d'Agliano, University of Milano.
  6. Per Krusell & Anthony A. Smith, Jr., "undated". "Income and Wealth Heterogeneity in the Macroeconomy," GSIA Working Papers 1997-37, Carnegie Mellon University, Tepper School of Business.
  7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, September.
  8. Joan Llull, 2014. "The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level," Working Papers 783, Barcelona Graduate School of Economics.
  9. Kambourov, Gueorgui & Manovskii, Iourii, 2004. "Occupational Mobility and Wage Inequality," IZA Discussion Papers 1189, Institute for the Study of Labor (IZA).
  10. 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.
  11. Michael P. Keane & Robert A. Moffitt, 1995. "A structural model of multiple welfare program participation and labor supply," Working Papers 557, Federal Reserve Bank of Minneapolis.
  12. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  13. Sumru Altuğ & Robert A. Miller, 1998. "The Effect of Work Experience on Female Wages and Labour Supply," Review of Economic Studies, Oxford University Press, vol. 65(1), pages 45-85.
  14. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  15. Saiz, Albert, 2007. "Immigration and housing rents in American cities," Journal of Urban Economics, Elsevier, vol. 61(2), pages 345-371, March.
  16. George J. Borjas & Richard B. Freeman, 1992. "Immigration and the Workforce: Economic Consequences for the United States and Source Areas," NBER Books, National Bureau of Economic Research, Inc, number borj92-1, September.
  17. Jacob A. Mincer, 1974. "Age and Experience Profiles of Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 64-82 National Bureau of Economic Research, Inc.
  18. Christopher L. Smith, 2012. "The Impact of Low-Skilled Immigration on the Youth Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 55-89.
  19. Donghoon Lee, 2005. "An Estimable Dynamic General Equilibrium Model Of Work, Schooling, And Occupational Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 1-34, 02.
  20. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-543, May.
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