# 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.