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Estimating the Effect of Immigration on Wages

Christian Dustmann and Ian Preston ()

No 2011026, Norface Discussion Paper Series from Norface Research Programme on Migration, Department of Economics, University College London

Abstract: We discuss approaches to estimating the effect that immigration has on wages of native workers which assume a three-level CES model, where immigrants and natives are allowed to be imperfect substitutes within an age-education cell, and predict the wage impact based on estimates of the elasticities of substitution at each level. We argue that this approach is sensitive to immigrants downgrading at arrival, and we illustrate the possible bias in estimating the elasticity of substitution between immigrants and natives.

New Economics Papers: this item is included in nep-lab
Date: 2011-12
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Working Paper: Estimating the Effect of Immigration on Wages (2011) Downloads
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