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14.661 Recitation 4:Do Immigrants Hurt Americans?
Card-Altonji (1991)
Yusuke Narita
October 2, 2014
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Question
Do immigrants crowd out natives &/or decrease their wages?
Numerous cross-sectional & DiD papers in labor & deve
Approach 1: Geographic variation in immigration inflow:Cards Miami paper, Card-Altonji (91)
todays focus
etc
endless controversy
Approach 2: Variation across demographic groups over time:Borjas (03) etc
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Theoretical Framework of Card-Altonji (91)
Many others focus on immigrants effect on labor market alone
But immigrants not only work but also eati.e. have both labor supply & goods demand effects
need for a joint model of labor & goods markets
local market model with a single (local) good & 4 types of labor
Native Immigrant
High Skill Homogeneous/Perfect SubstitutesLow Skill Homogeneous/Perfect Substitutes
Fix # of workers of each type & then add immigrants
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Good Market
A single (local) good produced by competitive firms with CRSproduction function & unit cost function c(wages, wu)
Market clearing condition:
good supply Y=
good demand Ds(price, ws)
demand by skilled
+ Du(price, wu)
by unskilled
+ Dx(price)
export
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Labor Market
Market clearing condition:
skilled labor supply Ls(price, ws)=
skilled labor demand Yc(ws, wu)ws
unskilled labor supply Lu(price, wu)=
unskilled labor demand Yc(ws, wu)wu
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What Happens if I Immigrants Come to the Town?
Assume cross elasticities of good demand & labor supply=0.Can differentiate market clearing conditions to get
a original % of unskilled while new %
Recall law of factor demand (Hicks-Marshall rules):ij=j(ij )
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Suggested Empirical Strategy
Can combine (3.ab) & the law into
log wageu=BuI/Plog(per capita labor supply)u=uBuI/P
where the coefficient is a complex function of parameters:
suggestRegress log wageu& log(per capita labor supply)u on I
Data: 1970 & 80 Census on low skill natives of age 19-64 in 120major cities (Standard Metropolitan Statistical Area; SMSA)
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4 Low Skill Natives Groups & Outcomes
Different groupswith differentage/educ/outcomes
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4 Low Skill Natives Groups & Outcomes
Groups face different levels of competition w/ immigrantsBlack women are most competitive
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Main Results
Lets control for differences across groups
Xgroup,
city: groups age & edu, citys population, interactionsYgroup,city =
of interest
(% of immigrants)city+Xgroup,city+ group,city
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Main Results
Yg,c=
of interest
(% of immigrants)c+Xg,c+g,c
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Main Results
Yg,c=
of interest
(% of immigrants)c+Xg,c+g,c
(% of immigrants)cIVed for by (% of immigrants)c in 1970 &its square (Bartel (89)s IV, also used in Card (09))
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Heterogeneous Effects?
Estimates remain unstable even if restricting sample to each group
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Do Immigrants Hurt Immigrants?
(immigrant wage)g,c=(% of immigrants)c+Xg,c+g,c(% of immigrants)cIVed for by (% of immigrants)c in 70 & its
square
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Takeaway & Concern
Takeaway
Ambiguous unstable answers to do immigrants hurt natives?
Effects on wage relatively more negative than on employment
Concern
Cross-city variation may be badly contaminated byendogenous city choices by immigrants Need for alternative approaches
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Preview of the Next Lecture
Yusuke Narita 14.661 Recitation 4: Do Immigrants Hurt Americans?Card-Altonj