Immigration and Production Technology

Ethan Lewis ()
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Ethan Lewis: Department of Economics, Dartmouth College, Hanover, New Hampshire 03755, and National Bureau of Economic Research, Cambridge, Massachusetts 02138

Annual Review of Economics, 2013, vol. 5, issue 1, 165-191

Abstract: Research on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the long-run labor market impact of immigration. A level of capital-skill complementarity supported in studies both involving and not involving immigration alone reduces the relative wage impact of immigration by 40% compared to simulations with separable capital. Other models in which the production structure responds to skill-mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, also imply that the long-run impact of immigration on wages is smaller than predicted by the standard model. This article discusses new research that tries to credibly evaluate such models using immigration-induced variation in the skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.

Keywords: capital-skill complementarity; choice of technique; innovation (search for similar items in EconPapers)
JEL-codes: J23 J24 J61 O31 O33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (48)

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