Working Paper: NBER ID: w16229
Authors: Abdurrahman Aydemir; George J. Borjas
Abstract: Although economic theory predicts an inverse relation between relative wages and immigration-induced supply shifts, it has been difficult to document such effects. The weak evidence may be partly due to sampling error in a commonly used measure of the supply shift, the immigrant share of the workforce. After controlling for permanent factors that determine wages in specific labor markets, little variation remains in the immigrant share. We find significant sampling error in this measure of supply shifts in Canadian and U.S. Census data. Correcting for the resulting attenuation bias can substantially increase existing estimates of the wage impact of immigration.
Keywords: Immigration; Wage Impact; Sampling Error; Attenuation Bias
JEL Codes: C1; J0; J6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Sampling error in immigrant share (C83) | Attenuation bias in wage impact estimates (J31) |
| Corrections for sampling error (C83) | Estimates of immigration's wage impact (K37) |
| Immigrant share (J11) | Wages (J31) |
| Higher immigration levels (K37) | Wages of competing workers (J31) |
| Larger samples (C55) | Significant negative correlations between wages and immigrant supply shifts (J69) |
| Smaller samples (C91) | Diminished effects of immigration on wages (J69) |