More evidence on immigration and wages

As of 2004 California employed almost 30% of all foreign born workers
in the U.S. and was the state with the largest percentage of immigrants
in the labor force.  It received a very large number of uneducated
immigrants so that two thirds of workers with no schooling degree in
California were foreign-born in 2004.  If immigration harms the labor
opportunities of natives, especially the least skilled ones, California
was the place where these effects should have been particularly strong.
But is it possible that immigrants raised the demand for California’s
native workers, rather than harming it?  After all immigrants have
different skills and tend to work in different occupations then natives
and hence they may raise productivity and the demand for complementary
production tasks and skills.  We consider workers of different education
and age as imperfectly substitutable in production and we exploit
differences in immigration across these groups to infer their impact on
US natives.  In order to isolate the "supply-driven" variation of
immigrants across skills and to identify the labor market responses of
natives we use a novel instrumental variable strategy.  Our estimates
use migration by skill group to other U.S. states as instrument for
migration to California.  Migratory flows to other states, in fact,
share the same "push" factors as those to California but clearly are
not affected by the California-specific "pull" factors.  We find that
between 1960 and 2004 immigration did not produce a negative migratory
response from natives.  To the contrary, as immigrants were imperfect
substitutes for natives with similar education and age we find that
they stimulated, rather than harmed, the demand and wages of most U.S.
native workers.

In other words, if lots of Mexican carpenters move to California, we don’t see the non-Mexican carpenters leaving in droves, due to lower wages. 

Here is the paper.  Here is a non-gated version.  The article makes the interesting observation that if California were counted as a nation (and the U.S. not), it would receive the second largest number of immigrants per year of any country, with only Russia beating it out.


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