This paper adds to the debate on the effect of immigration on native wages in the
United States over the past 50 years by critiquing a prominent study in this field. The debate
on this topic is an old one with a large body of literature behind it through which researchers
have argued the merits and pitfalls of different methods of econometric analysis. One of the
most influential studies of the past two decades, Borjas (2003), divides the national labor
force into skill groups based on a combination of education and experience. The effects of
immigration on native male wages are then analyzed using these cells as the unit of analysis
for a fixed effects model spanning 1960 to 2000. The study shows a strong negative effect of
immigration on native wages, earnings, and time worked along the entirety of the skill
spectrum.
However, the partial equilibrium model of Borjas (2003) cannot account for dramatic
shifts in labor demand taking place in the US during this time period. To illustrate this, I
replicate the model and analyze its results for another, simultaneous labor supply shock
taking place, that is the influx of women into the US labor force. I frame this analysis as a
search for omitted variable bias in the original model. I first insert data from the 2010 US
Census and then a variable for the share of women in each skill cell. As expected, the results
of this analysis do not show omitted variable bias in the model. Yet a close comparison of
the differences in the entrance of women and immigrants into the labor market over the past
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50 years, and the resulting differences in the correlation with native male wages, exposes
weaknesses in the model of Borjas (2003) that explain why the results of that study show
such a dramatic wage effect of immigration.