The Effect of Immigration on Wages: Exploiting Exogenous Variation at the National Level
No 1436, RF Berlin - CReAM Discussion Paper Series from Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM)
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 fiist 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: Immigration; Wages; Sub-Sample Two Stage Least Squares (search for similar items in EconPapers)
JEL-codes: J31 J61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ger, nep-lab, nep-lma and nep-mig
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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:crm:wpaper:1436
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