The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level

Joan Llull

No 783, Working Papers from Barcelona School of Economics

Abstract: This paper estimates the effect of immigration on native wages at the national level taking into account the endogenous allocation of immigrants across skill cells. Time-varying exogenous variation across skill cells for a given country is provided by interactions of push factors, distance, and skill cell dummies: distance mitigates the effect of push factors more severely for less educated and middle experienced. Because the analysis focuses on the United States and Canada, I propose a two-stage approach (Sub-Sample 2SLS) that estimates the first stage regression with an augmented sample of destination countries, and the second stage equation with the restricted sub-sample of interest. I derive asymptotic results for this estimator, and suggest several applications beyond the current one. The empirical analysis indicates a substantial bias in estimated OLS wage elasticities to immigration. Sub-Sample 2SLS estimates average – 1:2 and are very stable to the use of alternative instruments.

Keywords: wages; immigration; sub-sample two-stage least squares (search for similar items in EconPapers)
JEL-codes: J31 J61 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level (2018)
Working Paper: The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:783

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