Selective Immigration Policies and Wages Inequality

We quantify the overall impact of immigration on native wages in France from 1990 to 2010. Our short‐run simulations indicate that immigration has decreased native wages by 0.6%. We find on average no impact of immigration on wages in the long run. However, we show that the long‐run effects of immigration on wages are detrimental to high‐skilled native workers and benefits to low‐skilled native workers. Our structural estimation allows us to evaluate the impact of “selective” migration policies. In particular, we find that selective immigration policies toward highly educated workers reduce the wage dispersion of French native workers.     

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.     

How much do immigration and trade affect labor market outcomes?

"This paper provides new estimates of the impact of immigration and trade on the U.S. labor market.... We examine the relation between economic outcomes for native workers and immigrant flows to regional labor markets.... We...use the factor proportions approach to examine the contributions of immigration and trade to recent changes in U.S. educational wage differentials and attempt to provide a broader assessment of the impact of immigration on the incomes of U.S. natives." Comments and discussion by John DiNardo, John M. Abowd, and others are included (pp. 68-85).     

Offshoring,immigration, and the native wage distribution

Abstract This paper presents a simple model that examines the impact of offshoring and immigration on wages and tests these predictions using U.S. state‐industry‐year panel data. According to the model, the productivity effect causes offshoring to have a more positive impact on low‐skilled wages than immigration, but this gap decreases with the workers’ skill level. The empirical results confirm both of these predictions and thus present direct evidence of the productivity effect. Furthermore, the results provide important insight into how specific components of offshoring and immigration affect the wages of particular types of native workers.     

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.     

ESTIMATING THE RELATIONSHIP BETWEEN IMMIGRANT AND NATIVE WORKERS IN AUSTRALIA: A PRODUCTION THEORY APPROACH

The impact of immigration on labour markets depends, among other factors, on the substitutability or complementarity between immigrants and natives. This relationship is examined by treating migrant and native labour, along with capital, as inputs in production process. Estimated price elasticities of substitution between immigrants and native labour suggest that in Australian context, an increase in the wage rate of one group of workers leads to an increased demand for the other. The estimated elasticities of substitution between immigrant and native workers and the complementary relationship between immigrants and capital provide an insight into the complex effects of immigration.     

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.     

Temporary and Permanent Immigration under Unionization

This paper investigates permanent and temporary immigration and remittance under the coexistence of unionized and non‐unionized manufacturing firms in a two‐sector economy. The impacts of immigration and remittance on respectively wages, employment, the union–non‐union wage gap and national welfare are analyzed. It is found that both permanent immigration (economy‐wide) and temporary immigration in agriculture bring positive effects on most variables (except the competitive wage), but widens the wage gap and causes income redistribution in the host country. However, if temporary immigrants work in manufacturing only, then all wages and the union–non‐union wage gap fall. That is, workers become more equally paid but poorer. In addition, remittance and globalization cause negative effects on union workers and employers. It is perhaps such consequences and the income redistribution effect of immigration that cause the media to paint a negative image of immigration.     

EMPLOYMENT VERIFICATION MANDATES AND THE LABOR MARKET OUTCOMES OF LIKELY UNAUTHORIZED AND NATIVE WORKERS

As recent efforts to reform immigration policy at the federal level have failed, states have started to take immigration matters into their own hands and researchers have been paying closer attention to state dynamics surrounding immigration policy. Yet, to this date, there is not a clear understanding of the consequences of enforcing E‐Verify on likely unauthorized immigrants or on natives across the United States. This study aims to fill in that gap by analyzing the impact that the enactment of various types of E‐Verify mandates may have on the employment and wages of these groups. We find that the enactment of employment verification mandates reduces the employment likelihood of likely unauthorized workers. Additionally, it raises the hourly wages of likely unauthorized women. None of these impacts are observed among a similarly skilled sample of naturalized Hispanic immigrants. Finally, the enactment of E‐Verify mandates appears to raise the employment likelihood of alike non‐Hispanic natives, while raising the hourly wage of native‐born male employees, alluding to the potential substitutability of unauthorized immigrants and non‐Hispanic natives. (JEL J2, J3, J6)     

Migration,Unemployment, and Skill Downgrading

In this paper, we analyze the labor market impacts of immigration under flexible and rigid labor market regimes. A general equilibrium framework is developed, accounting for skill heterogeneity and labor market frictions, where unemployed medium‐skilled manufacturing workers are downgraded into low‐skilled service jobs, while low‐skilled service workers might end up unemployed. The analytical analysis shows that medium‐skill immigration decreases low‐skilled unemployment under the flexible regime, indicating a complementarity effect, while the rigid regime induces a substitution effect, leading to low‐skilled unemployment. Moreover, it leads to wage polarization. In a numerical analysis, the economic effects of different migration scenarios are quantified.     

Immigration, Unemployment and Pensions

This paper examines the impact of immigration on a host country with welfare state arrangements that support both the unemployed and the elderly. It is shown that low‐skilled immigration increases the unemployment rate. Furthermore, it harms the low‐skilled native population and benefits the high‐skilled natives and pensioners. Nevertheless, as under competitive labor markets, immigration generates an unambiguous gain for the native population as a whole. However, in contrast to the findings under full employment, this gain can be dampened by an expansion of the pension system.     

Reinterpreting the performance of immigrant wages from panel data

Immigrants differ from the native born in terms of unobserved factors, such as motivation, and observed factors, including those related to the interruption of labour market activity and earning capacity, which may bias estimates of immigrant integration. Using panel data from the Survey of Labour and Income Dynamics, we show that using potential experience, rather than actual experience, exaggerates estimates of the disruption and recovery caused by immigration. More importantly, we find support for omitted variables bias, arising from unobserved fixed effects. Instrumental variable estimates for both pooled and separate samples of immigrant and native born men demonstrate a wage disadvantage for immigrants upon entry that persists through their lifetime. Standard estimates of a modest wage advantage for the children of immigrants also suffer from omitted variables bias arising from unobservables. Contrary to most of the literature to date, our instrumental variable estimates which allow for unobservable fixed effects suggest that immigrants never catch up to otherwise comparable native born workers, but their children do just as well. We would like to thank Statistics Canada for permitting access to the data and solving associated technical problems, the Prairier Centre for Research on Immigration and Integration for financial assistance, and Peter Schnabl for excellent research assistance. An earlier version of this paper was presented to the 10th International Conference on Panel Data in Berlin, July 5–6, 2002. The authors take sole responsibility for errors, omissions and interpretation of the data.     

IMMIGRATION UNEMPLOYMENT RELATIONSHIP: THE EVIDENCE FROM CANADA*

This paper examines the relationship between unemployment and immigration in Canada. The bi‐directional causality test finds no evidence of a significant effect of Canadian immigration on unemployment. Cointegration tests indicate that there is no observed increase in aggregate unemployment due to immigration in the long run. The results from the causality test based on the vector error correction model confirm that, in the short run, past unemployment does cause (less) immigration but not vice versa. There is also a long‐run positive relationship among per‐capita GDP, immigration rate and real wages. The results indicate that, in the short‐run, more immigration is possibly associated with attractive Canadian immigration policies, and in the long‐run, as the labour market adjusts, Canadian‐born workers are likely to benefit from increased migration.     

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.     

Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration*

In this paper we employ a wage‐setting approach to analyze the labor market effects of immigration into Germany from 1980 to 2004. This enables us to consider labor market rigidities, which are prevalent in Europe. We find that the elasticity of the wage‐setting curve is particularly high for young workers. Moreover, natives and foreigners are imperfect substitutes. The wage and employment effects of immigration depend on the skill structure of the immigrant workforce. Because the foreign labor supply shift has mainly affected the high‐skilled labor market segment, the 4 percent increase of the workforce through immigration has not increased either aggregate or foreign unemployment.     

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.     

The impact of immigration on the human capital of natives

"Implications of the quantity (number) and quality (skill) of immigration on the destination economy are analyzed, including impacts on value added, wages, quasi rents, rates of return, and the skill distribution of the native labor force. Quantity-quality trade-offs are considered for both immigrant and native workers. Medium- and long-run labor-supply responses by natives to immigrant-induced changes in wage rates are shown to have second-order effects which subtantively affect the impacts of immigrants. The impact of immigration policy depends on the quality as well as quantity of immigrants, the time horizon, and the speed of factor market adjustment."     

The political economy of naturalization

This paper presents a political economy model in which self‐interested natives decide when citizenship and/or voting rights should be granted to foreign‐born workers. Native voters know that immigrants hold different ‘political’ preferences and would thus tend to postpone their enfranchisement as much as possible. They also consider, however, that a more restrictive naturalization policy may reduce the gains from immigration. We find that the optimal timing of naturalization depends on the quantity, quality (productivity), and preferences of potential immigrants, the political composition and the age structure of the native population, as well as the sensitivity of migration choices to the citizenship issue.     

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.     

Immigration and Its Impact on the Incidence of Training in Australia

Critics of immigration often argue that by providing a cheap alternative to training, immigration acts as a disincentive for employers to invest in training. Immigration, therefore, may be partly responsible for Australia's poor record in the area of industry training. This article evaluates this argument using data recently collected by the ABS.
Probit models explaining the determinants of three types of training—in-house, external and on-the-job—are estimated for the Australian-born workforce. These models are then augmented with a variable representing the impact of skilled immigration. Initial estimates indicated that immigration was significantly and inversely associated with the probability of Australian-born workers receiving in-house training.
This inverse association, however, may result not because employers hire skilled immigrants in preference to providing training, but because skilled immigrants are over-represented in low training industries. A two-step procedure, involving first identifying the size of industry fixed effects on training and then isolating the impact of immigration on these fixed effects, confirms that it is industry-specific effects which are of most importance. It is concluded, therefore, that immigration is currently not displacing any training activities in Australia.