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

  • 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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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 366.

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Date of creation: 2012
Date of revision:
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
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  3. Christian Dustmann & Tommaso Frattini & Ian P. Preston, 2013. "The Effect of Immigration along the Distribution of Wages," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 145-173.
  4. 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, July.
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  8. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration and Wages," Working Papers 91, University of California, Davis, Department of Economics.
  9. 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.
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  11. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2008. "Imperfect Substitution between Immigrants and Natives: A Reappraisal," NBER Working Papers 13887, National Bureau of Economic Research, Inc.
  12. Borjas, George J, 1983. "The Substitutability of Black, Hispanic, and White Labor," Economic Inquiry, Western Economic Association International, vol. 21(1), pages 93-106, January.
  13. Zvi Eckstein & Yoram Weiss, 2004. "On The Wage Growth of Immigrants: Israel, 1990-2000," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 665-695, 06.
  14. Joan Llull, 2014. "The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level," CReAM Discussion Paper Series 1436, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  15. 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.
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  17. Daniel McFadden, 1987. "A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration," Working papers 464, Massachusetts Institute of Technology (MIT), Department of Economics.
  18. Altug, Sumru & Miller, Robert A, 1998. "The Effect of Work Experience on Female Wages and Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 65(1), pages 45-85, January.
  19. 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.
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  21. Grossman, Jean Baldwin, 1982. "The Substitutability of Natives and Immigrants in Production," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 596-603, November.
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  23. 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.
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