Immigration and domestic wage: an empirical study on competition among immigrants

While studies on the wage effects of immigration focus on native workers, there is significantly less information on the wage effects of immigration on domestic foreign-born workers. In addition to analysing the impact of immigration on wages of native workers, in this article, we estimate the internal competition among foreign-born workers in the United States. Firstly, using data from the Current Population Survey, we find no empirical evidence supporting the substitutability of native workers for immigrants. Secondly, there is no statistical difference between skilled and unskilled immigrants on the influence of the domestic labour market outcomes. Finally, there is no internal competition among immigrants. The income of non-citizen workers mainly depends on state and national levels of economic situations, not the number of non-citizen workers available in the labour market.     

Changes in income distribution and welfare from greater immigration of unskilled workers

This paper considers the consequences of greater immigration of unskilled labor on income distribution and welfare in the receiving country. To address these issues, both the sending and receiving countries are represented in a static general equilibrium model which distinguishes between skilled and unskilled labor and which allows prices to be determined endogenously. In this framework an inflow of unskilled labor is likely to reduce wages of unskilled labor, but whether capital or skilled labor benefits depends upon demand elasticities, elasticities of substitution in production, and differences across countries in the productivity of unskilled labor. National welfare in the receiving country is likely to rise, to the extent that the relative price of importable goods falls, non-residents already in the country receive lower wages, immigrants receive lower wages than those paid to domestic workers, and immigrants cause little increased demand for public services and transfer programs.     

Capital–skill complementarity and the immigration surplus

We build a neoclassical growth model with overlapping dynasties and capital–skill complementarities to evaluate changes in immigration policy. Calibrating the model using US data, we quantify the differential effects of skilled and unskilled immigration on factor returns and on the welfare of different sectors of the population. An influx of high-skilled immigrants lowers the wages of skilled workers, raises the wages of unskilled workers, and because of the relative complementarity between capital and skilled labor, substantially raises the rate of return to native-owned capital. By contrast, an influx of unskilled immigrants produces an opposite effect on wages, and has only a negligible effect on the return to capital. Because of capital–skill complementarity, an increase in the number of skilled immigrants generates an immigration surplus—the overall welfare benefit accruing to the native population—that is approximately ten times larger than the immigration surplus generated by an identical increase in the number of unskilled immigrants. This differential welfare effect is far higher than can be accounted for by the disparity between the productivities of each type of worker.     

Substitution of labour,capital and energy in the manufacturing sector of Pakistan

Share equations of labour, capital, energy and fuel types, derived from translog cost functions, are estimated by Zellner iterative method to obtain elasticities of labour, capital, energy and fuel types and elasticities of substitution between them. Labour, capital and energy appear as substitutes, natural gas and electricity as complements, and other fuels as substitutes.     

A SEARCH‐EQUILIBRIUM APPROACH TO THE EFFECTS OF IMMIGRATION ON LABOR MARKET OUTCOMES

We analyze the impact of the U.S. skill‐biased immigration influx that took place between 2000 and 2009 within a search and matching model that allows for skill heterogeneity, differential search cost, and capital‐skill complementarity. We find that although the skill‐biased immigration raised the overall net income to natives, it had distributional effects. Specifically, unskilled native workers gained in terms of both employment and wages. Skilled native workers, however, gained in terms of employment but lost in terms of wages. Nevertheless, in an extension where skilled natives and immigrants are imperfect substitutes, even the skilled wage rises.     

HIGH-SKILLED MIGRATION AND THE EXERTION OF EFFORT BY THE LOCAL POPULATION

The optimal design of immigration policy is a topical issue, both in the policy debate and the economic literature. In this paper, we present empirical evidence from a firm level dataset collected in 2000 on the demand for high-skilled workers, including foreign workers, in Europe and its determinants. Our major findings are that the fraction of high-skilled workers recruited from the international labour market is very small, and that foreign and domestic workers are very similar in terms of their formal education (measured by specialization subject) and their job characteristics. We suggest an efficiency wage model to explain why firms recruit foreign workers in small numbers, and why they are willing to pay immigrants the same wage as local workers, whilst at the same time also paying for their moving costs, despite the similar human capital profile of immigrants to domestic workers.     

Policy reform and labour demand in branches of Sri Lankan manufacturing industry

Many policy reforms in developing countries aim to remove factor market distortions. Whether such reforms reduce unemployment depends partly on the substitution possibilities between labour and other factors of production. This paper examines labour demand in seven branches of Sri Lankan manufacturing industry, using data on 4-digit industrial categories over the 1990 to 1997 period. The Box–Cox transformation is used to allow for flexible, and data-dependent, elasticities. The elasticity of capital–labour substitution varies widely across the branches of industry and is usually variable rather than constant. The average, long-run own-wage elasticity of labour demand for the manufacturing sector is estimated as ?0.80, so factor price policy should have an important effect on labour demand in this setting.     

Do Immigrants Affect Firm‐Specific Wages?*

We propose and test a novel effect of immigration on wages. Existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market. We argue that if labour markets are not fully competitive, immigrants might also affect wage formation at the most disaggregate level – the workplace. Using linked employer?employee data, we find that an increased use of low‐skilled immigrant workers has a significantly negative effect on the wages of native workers at the workplace – also when controlling for potential endogeneity of the immigrant share using both fixed effects and instrumental variables.     

Immigration, fertility, and human capital: A model of economic decline of the West

I show how the influences of unskilled immigration, differential fertility between immigrants and the local indigenous population, and incentives for investment in human capital combine to predict the decline of the West. In particular, indigenous low-skilled workers lose from unskilled immigration even if the indigenous low-skilled workers do not finance redistribution, do not compete with immigrants in the labor market, and do not compete with immigrants for publicly financed income transfers. For the economy at large, high-fertility unskilled immigrants and a low-fertility indigenous population result in economic decline through reduced human capital accumulation and reduced growth of per-capita output.     

Immigration Policy,Self‐selection,and the Quality of Immigrants*

This paper investigates the effects of immigration quotas on the average quality of immigrants by developing a human capital migration model where efficiency in migration depends on skills and emigration rates are higher among skilled workers. Studying the joint determination of the domestic level of wages and immigrants' self‐selection, we find a negative relationship between the wage level and the percentage of educated workers among immigrants, which results in a nonstandard downward‐sloping labor supply. In our framework, a higher quota increases the skill mix of immigrants through its negative effect on wages and raises aggregate national income.     

The Spanish automotive industry: scale economies and input relationships

This paper investigates the existence of economies of scale in the Spanish automobile industry as well as the substitution possibilities between input pairs and the direct and cross price elasticities of demand for the various inputs by estimating a translog cost function for both a three input model involving capital, labour, and intermediate goods as well as a four input model where energy is separated from other intermediate goods. The results of this study are consistent with the hypothesis of economies of scale in the Spanish automobile industry, particularly at the low and mean levels of output. These results also are consistent with the hypothesis that capital is a substitute for the other inputs, but that labour and intermediate goods are complements. Labour and energy also appear to have a complementary relationship over most of the data points in this study. The significance of a complementary relationship between labour and intermediate goods is that any attempt by the Spanish government to restrict imports of these inputs, resulting in higher domestic prices for them, may aggravate an already serious domestic unemployment problem.     

Three million foreigners,three million unemployed? Immigration flows and the labour market in France

This paper investigates the effect of the flows of immigrant workers on the French labour market from the mid-1970s to the mid-1990s. Using a system of equations for unemployment, labour-force participation, the real wage and the immigration rate, it is shown that, in the long run, both legal and amnestied immigrant workers, and immigrant families lower the unemployment rate permanently. In the short-run, the arrival of immigrants increases unemployment slightly with an impact effect similar to that of an increase in domestic labour-force participation. The composition of immigration flows matters and the results indicate that the distribution between workers from the European Union and other regions of the world, also more skilled and less skilled workers, should remain balanced.     

The dynamic impact of immigration on natives' labor market outcomes: Evidence from Israel

This paper studies the short and medium run impact of highly skilled immigrants from the Former Soviet Union to Israel on natives' wages and employment. If immigrants are relatively good substitutes for native workers, the impact of immigration will be largest immediately upon the immigrants' arrival, and may become smaller as the labor market adjusts to the supply shock. Conversely, if immigrants upon arrival are poor substitutes for natives, the initial effect of immigration is small, and increases over time as immigrants acquire local labor market skills and compete with native workers. We empirically examine these alternative hypotheses using data from Israel between 1989 and 1999.We find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a labor market segment. A 10 percent increase in the share of immigrants lowers natives' wages in the short run by 1–3 percent, but this effect dissolves after 4–7 years. This result is robust to a variety of different segmentations of the labor market, to the inclusion of cohort effects, and to different dynamic structures in the residual term of the wage equation. On the other hand, we do not find any effect of immigration on employment, neither in the short nor in the medium run.     

SEGREGATION IN THE AUSTRALIAN LABOUR MARKET*

An important measure of the success of immigration is the assimilation of immigrants into the labour force of the host country. This criterion is important from both the perspective of immigrants themselves and that of the host country. Conversely, concentration of migrants in a few sectors is undesirable because of its adverse socio‐economic consequences. Since the pattern of distribution of migrant employment influences the structure and outcomes in the labour market in various ways, it attracts public, academic and policymakers’ attention. The present paper employs various numerical measures to estimate the degree of immigrant segregation across occupations and industries in Australia. The results indicate that the occupational distribution of immigrants is very similar to the proportion of native workers employed in the various occupations. This similarity also characterises the industrial distribution of immigrant employment. Thus, contrary to popular perception and findings for the United States, evidence from the Australian labour market does not indicate the existence of widespread immigrant segregation.     

Occupational Attainment and Immigrant Economic Progress in Australia*

Using data from the 2001 Australian Census of Population and Housing, on adult men in full‐time employment, this paper augments a conventional human capital earnings function with information on occupations. It also estimates models of occupational attainment. The results from both the earnings function and model of occupational attainment indicate that the limited international transferability of human capital skills results in immigrants entering into relatively low status occupations when they first enter the Australian labour market. Comparison with similar research for the USA suggests that the different immigrant selection regimes (primarily family reunion in the USA, skill‐based immigration in Australia) do not impact on the negative association between current occupational status and pre‐immigration labour market experience.     

Labor market assimilation of immigrants in Spain: employment at the expense of bad job-matches?

During the last decade, Spain has experienced an unprecedented increase of immigration from three localized areas: Eastern Europe, Latin America, and Africa. Using data from the Labour Force Survey for the period 1996–2006, we study the labour characteristics of recent immigrants, identifying the major differences with the native population at arrival and tracking whether these differences fade away as their years of residence in Spain increase. We allow the returns to human capital and the sensitivity to the business cycle to differ between immigrants and natives. Overall, our results show that, compared to natives, immigrants face initially higher participation and unemployment rates, as well as higher incidence of overeducation and temporary contracts. However, 5 years after arrival immigrants’ participation rates start to converge to natives’ rates, unemployment rates decrease to levels even lower than those of natives, and the incidence of overeducation and temporary contracts remains roughly constant: no reduction of the gap with Spanish workers is observed. We are grateful to Christian Dustmann, Juan F. Jimeno, Claudio Michelacci, an anonymous referee, and seminar participants at the 2006 EALE Conference, 2006 Simposio de Análisis Económico, BBVA Economic Research Department, FEDEA, CReAM, INSIDE and LECG for helpful comments and suggestions.     

Immigration policy and employment assimilation in the United States

We examine the impact of immigration policy on the employment propensity and assimilation of immigrants using a pooled cross-section of the 1994–2004 Current Population Surveys (CPS). The results are generally consistent with positive immigrant employment assimilation. A Blinder–Oaxaca style decomposition shows that the foreign-born obtain more employment primarily through human capital acquisition and changes in labour market conditions rather than higher returns to observable skills, as sometimes seen in wage studies. In addition, our analysis suggests that immigration policies may influence both labour demand and supply incentives and are associated with structural shifts in the labour market.     

OPTIMAL IMMIGRATION POLICY: WHEN THE PUBLIC GOOD IS RIVAL*

In this model, we characterize optimal immigration and fiscal policies in the presence of a rival public good and heterogeneous discounting. Surprisingly, even if the government is benevolent towards natives only, it is optimal to keep borders open. Indeed, in the long run, patient natives hold the whole stock of capital, while impatient immigrants work. Moreover, since capital intensity is stationary, capital per native, consumption and the public good increase with the number of (immigrant) workers. This positive effect offsets the disutility deriving from the congestion of the public good. However, when we account for the costs associated with cultural heterogeneity, we find that it is optimal to regulate immigration inflows. We also analyze the long‐run sensitivity of the optimal policy mix with respect to the fundamentals.     

Unskilled immigration,technical progress,and wages—Role of the household sector

This paper revisits the relationship between unskilled immigration and skilled wage in the context of the BREXIT episode. Our simple general equilibrium model introduces a household sector, the inclusion of which shows that both return to capital and effective skilled wage may increase with a greater inflow of immigrants. This is a novel outcome in the theory of trade and factor flows. In addition, though technical progress in a skill‐intensive sector raises wage inequality, it no longer displaces traditional jobs. Here, the usual negative impact of unskilled immigration on the traditional sector is mitigated by increased returns to the unskilled workers.     

International immigration and economic welfare in an efficiency wage model: The co-existence case of both legal and illegal foreign workers

Abstract. In the developed countries some native workers are unemployed while there exist illegal unskilled (legal skilled) foreign workers who are complementary to (substitutable for) natives and their wages are usually lower than (equal to) that of natives. Reflecting this situation, we introduce two types of immigrant in an efficiency wage model. It is shown that domestic government should exclude illegal foreign workers but welcome legal ones if the total number of illegal immigrants is small enough and well controlled. On the other hand, legal immigration should be restricted if the flood of illegal immigration is out of control.