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

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  • Joan Llull

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

Abstract

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.

Suggested Citation

  • Joan Llull, 2012. "Immigration, Wages, and Education: a Labor Market Equilibrium Structural Model," 2012 Meeting Papers 366, Society for Economic Dynamics.
    • Handle: RePEc:red:sed012:366
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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • 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

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