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Citation Information

Type Working Paper
Title Refining the estimation of immigration’s labor market effects
Author(s)
Publication (Day/Month/Year) 2005
URL http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.579.6457&rep=rep1&type=pdf
Abstract
Reviewing a large set of papers that analyzed the effect of immigration on the wages of nativeborn
workers in the U.S., the National Academy of Science Panel on Immigration (1997)
concluded “there is only a small adverse impact of immigration on the wage and employment
opportunities of competing native groups.” Borjas (2003) argues that migration within the U.S.
arbitrages local wage differentials and therefore the effects estimated in many previous studies
are understated. He uses variation across skill groups over time in the national labor market and
finds large negative impacts of immigration on the wages of native-born workers. A central
theoretical prediction of his model is that the effect of immigration on wages should be equal
across regions in the U.S. We test this prediction and reject it. The apparent effect of
immigration on the wages of native born workers is three times larger in states with a durable
goods manufacturing base. The effects are particularly large in manufacturing areas for high
school dropouts and high school graduates the two groups most affected by deindustrialization.
This suggests that the large effects reported in Borjas (2003) are at least in part driven by
changes in labor demand. Immigrant share may be more a measure of labor demand than labor
supply. We present several other pieces of evidence that suggest reason to doubt large negative
estimates of immigrant share on the wages of native-born Americans. The measured effect of
immigration on college graduates appears to be positive; this is traced to the number of college
educated native born workers rising not the number of college educated immigrants workers
rising. A rising supply of college graduates lowering wages is consistent with Murphy and Welsh
(1992). Finally, we also show that the wages of high school dropouts were falling considerably
preceding the rise in the fraction of the low-skilled workforce that were immigrants.

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