Working Paper: NBER ID: w13389
Authors: Giovanni Peri; Chad Sparber
Abstract: Many workers with low levels of educational attainment immigrated to the United States in recent decades. Large inflows of less-educated immigrants would reduce wages paid to comparably-educated native-born workers if the two groups compete for similar jobs. In a simple model exploiting comparative advantage, however, we show that if less-educated foreign and native-born workers specialize in performing complementary tasks, immigration will cause natives to reallocate their task supply, thereby reducing downward wage pressure. Using individual data on the task intensity of occupations across US states from 1960-2000, we then demonstrate that foreign-born workers specialize in occupations that require manual tasks such as cleaning, cooking, and building. Immigration causes natives -- who have a better understanding of local networks, rules, customs, and language -- to pursue jobs requiring interactive tasks such as coordinating, organizing, and communicating. Simulations show that this increased specialization mitigated negative wage consequences of immigration for less-educated native-born workers, especially in states with large immigration flows.
Keywords: Immigration; Wages; Task Specialization; Comparative Advantage; Labor Supply
JEL Codes: F22; J31; J61; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased specialization due to immigration (J69) | Mitigation of wage losses for less-educated natives (F66) |
| Immigration (F22) | Reallocation of less-educated native workers towards interactive tasks (J69) |
| Reallocation of less-educated native workers towards interactive tasks (J69) | Reduction in relative supply of manual tasks performed by native workers (F66) |
| Immigration (F22) | Wage reduction for less-educated natives (J79) |