Immigration and wages: the latest

From Ottaviano and Peri:

This paper estimates the effects of immigration on wages of native
workers at the national U.S. level. Following Borjas (2003) we focus on
national labor markets for workers of different skills and we enrich
his methodology and refine previous estimates. We emphasize that a
production function framework is needed to combine workers of different
skills in order to evaluate the competition as well as cross-skill
complementary effects of immigrants on wages. We also emphasize the
importance (and estimate the value) of the elasticity of substitution
between workers with at most a high school degree and those without
one. Since the two groups turn out to be close substitutes, this
strongly dilutes the effects of competition between immigrants and
workers with no degree. We then estimate the substitutability between
natives and immigrants and we find a small but significant degree of
imperfect substitution which further decreases the competitive effect
of immigrants. Finally, we account for the short run and long run
adjustment of capital in response to immigration. Using our estimates
and Census data we find that immigration (1990-2006) had small negative
effects in the short run on native workers with no high school degree
(-0.7%) and on average wages (-0.4%) while it had small positive
effects on native workers with no high school degree (+0.3%) and on
average native wages (+0.6%) in the long run. These results are
perfectly in line with the estimated aggregate elasticities in the
labor literature since Katz and Murphy (1992). We also find a wage
effect of new immigrants on previous immigrants in the order of
negative 6%.

I have yet to read the paper.  Here is an ungated version.


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