Working Paper: NBER ID: w16332
Authors: Giovanni Peri; Chad Sparber
Abstract: There is a long-standing debate among academics about the effect of immigration on native internal migration decisions. If immigrants displace natives this may indicate a direct cost of immigration in the form of decreased employment opportunity for native workers. Moreover, displacement would also imply that cross-region analyses of wage effects systematically underestimate the consequences of immigration. The widespread use of such area studies for the US and other countries makes it especially important to know whether a native internal response to immigration truly occurs. This paper introduces a microsimulation methodology to test for inherent bias in regression models that have been used in the literature. We show that some specifications have built biases into their models, thereby casting doubt on the validity of their results. We then provide a brief empirical analysis with a panel of observed US state-by-skill data. Together, our evidence argues against the existence of native displacement. This implies that cross-region analyses of immigration's effect on wages are still informative.
Keywords: Immigration; Native Displacement; Labor Market; Microsimulation
JEL Codes: J61; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Borjas (2006) model bias (J79) | negative correlation between immigration inflows and native outflows (J61) |
| standard deviation of native employment changes increases (J69) | bias in Borjas' estimates grows larger (J79) |
| analysis of observed data from 51 states and 32 skill groups (C80) | no evidence of displacement (J60) |
| correlation evidence (C10) | does not support existence of displacement (C62) |
| findings (Y40) | indicate strong attraction between immigrants and natives (J61) |