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CECN 640: Impact of Immigration On Destination Country: Accounting For More Adjustment
CECN 640: Impact of Immigration On Destination Country: Accounting For More Adjustment
CECN 640
The Economics of Immigration -Effects of Immigration (II)
(Reading: Chapter 7)
20-Mar-14
reduces native in%migration by 635*=, but no significant statistical evidence for out%migration
<owever, ,$8 estimator could be biased because location decisions can be endogenous to area characteristics "stimators such as &@/#8$8/*8$8 should be used instead
)s well, .iler finds that in his sample, relatively well to do white workers are also more likely to move, and the reasons:
Ereater access to capital markets 1etter connection hence easier to find another job in alternative areas because white culture dominates in better part of the country!
8ee .rey, Billiam <3 /00:3 F&mmigration and &nternal Migration F.lightF: ) 'alifornia 'ase 8tudy3F Population and Environment, /4 -!: *:*%9:3 Neprint No3 --03
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%rig&t! et al' (1""(# )&e lin*age +et,een immigration and internal migration in large metropolitan areas in t&e -nited .tates
Bright et al3 /009! re%e+amined .reyHs specifications and conclude that native outflows from large metropolitan areas are unrelated to immigrant inflows3 Nather, Bright et al3 using the /056 and /006 78 census micro% samples, and controlling for the siAe of the areas, find that large metropolitan areas suffer net losses of internal migrants for reasons other than the flow of immigrants to these localities:
net migration of the native born for metropolitan areas is either positively related or unrelated to immigration net migration loss of unskilled native workers from metropolitan areas is probably a function of those citiesM population siAe rather than immigrant flow to them conclude that the net migration loss of native born low%skilled workers from large metropolitan areas is more likely the result of industrial restructuring than of competition with immigrants )s well, net migration of natives with high levels of education, is statistically significantly positively related to immigration flows
/orjas! reeman! 0 1at2! (1""(#: 3o, Muc& Do Immigration and )rade Affect 4a+or Mar*et 5utcomes
1orjas et al3 build another model, taking into account of the fact that the native population of various regions could grow at various rate in the absence of immigration 7sing a Gdouble differenceH techniDue!3 Main findings:
immigration does not decrease the native population, but decrease the native labor force so immigration causes natives to commute to neighboring labor markets! &mmigration does not have a consistent, discernible effect on area economic outcomes There are other regional factors dominate the ups and downs of area economies!, but: &mmigration has a marked adverse impact on the economic status of the least skilled 7383 workers high school dropouts and those in the bottom #6 percent of the wage distribution!3
8ee: 1orjas, E3, .reeman, N3, 2 PatA, $3 /009!3 <ow much do immigration and trade affect labor market outcomes3 1rookings (apers on "conomic )ctivity, /, /?493
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20-Mar-14
/orjas (2007#! 8ati9e Internal Migration and t&e 4a+or Mar*et Impact of Immigration
1orjas #664!, using data from the /046?#666 decennial censuses, concludes that immigration is associated with:
lower in%migration rates, higher out%migration rates, and decline in the growth rate of the native workforce3 The native migration response attenuates the measured impact of immigration on wages in a local labor market by -6 to 46 percent, depending on whether the labor market is defined at the state or metropolitan area level3
/orjas (2007#! 8ati9e Internal Migration and t&e 4a+or Mar*et Impact of Immigration
1orjas also directly estimated the impact of the immigrant share on the native workforce and migration rate3 .indings:
the impact of immigration on the native workforce diminished with the siAe of the area3 )t the city level, for every ten immigrants that arrive, slightly over : natives leave3 )t the state level, around # natives will leave the workforce for every ten immigrants that enter3 )t the 'ensus division level, the estimated effect was found to be unstable, varying between nil and appro+imately # natives3
http://jhr3uwpress3org/content/Q$&/#/##/3full3pdfRhtml
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3atton! 0 )ani! (200:#' Immigration and Inter-;egional Mo+ility in t&e -1! 1"<2=2000
<atton and Tani #66:! in a study of the local labour market response to immigration in the 7P, find: Most studies that look across local labour markets have found the effects of immigration to be benign3 ,ne possibility is that
immigrants to a specific area do indeed push non%immigrants onwards elsewhere, thereby diffusing the negative labour market wage effects The effects are not uniform across the 7P stronger in the southern regions where immigrants are more heavily concentrated! 'onclusion: internal migration is indeed one of the mechanisms through which regional labour markets adjust to immigration shocks3
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/orjas (2007#: 8ati9e internal migration and t&e la+or mar*et impact of immigration
1orjas #664! asked how much of the difference between the estimated wage effects of immigration obtained from national studies and those obtained from local studies can be e+plained by the diffusing effects of internal migration3 Main findings ne+t slide!:
Bhen sample of the labor market under consideration includes both men and women, a /6= increase in immigration share will:
Neduce weekly earning by :3*#= at the national level3 Neduce weekly earning by *3:= at the 'ensus division level Neduce weekly earning by #39= at the state level, and Neduce weekly earning by between 6= and 634= at city level
The estimated wage effect thus nearly evaporates when the labor market is disaggregated down to the local level3
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20-Mar-14
/orjas (2007#: 8ati9e internal migration and t&e la+or mar*et impact of immigration
)s well, large differences in the wage effects of immigration across geographic definitions of the labor market could be accounted for by native labor mobility3 assuming that the national labor market appro+imates a closed economy, so that the estimated wage effects of immigration at the national level reflect the true elasticity of the native born wage with respect to immigration3! Main findings:
native mobility responses account for about -6= of the gap between state% level wage effects and national%level effects; and
mobility responses account for as much as 46=of the difference between city wage effects and national effects3 ,verall, these results all suggest that internal migration is an important albeit secondary! adjustment process3
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wages are relatively unresponsive to local supply, there seems to be accommodating changes in production technology
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20-Mar-14
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To what e+tend immigrants will generate enough demand in their host economy for their own labour and their hostHsC &f immigrants spend at least part of their earnings in the destination economy on goods and services produced locally, immigration will trigger changes in the derived demand for more labor, including their own3 Bages and employment rates in the destination economy would therefore be affected3 'hanges in immigrant remittance rates and changes in public spending on goods and services for immigrants could further shift derived demand3 )s well, if new immigrants indeed drive down wages in the host economy, the resulting lower labor costs will shift the product supply curve and generate lower costs for consumers3 &mmigration is therefore likely to change product prices directly through consumer demand or indirectly through product supply channels3
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20-Mar-14
&mmigrants do not seem to make settlement decisions based on the availability of welfare and social services; they settle where jobs are and where their close family are3
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>@ternalities of Immigration
&mmigration may generate various kinds of e+ternalities, positive or negative:
Naising productivity throughout the economy, as a result of the increasing siAe of the market, and level of competition3 Naising level of technology as a result of new ideas, new products and new production methods that may come with the immigrants, which could raise the productivity of all factors in the economy )s well, because immigration increases the total siAe of the economy, immigrants allow further e+ploitation of the scale economies3 )s well, on the negative side: increased crime, pollution, and the destruction of traditional culture Necently, Nobert (utnam suggests that immigration reduces social solidarity and social capital, which could also undermine productivity
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'anadaHs newly inaugurated Gsuper visaH for parents and grandparents serve the same purpose
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&f positive e+ternality prevail, wage rate will not fall but rise to w*!3 &n this situation, native workers will gain the checkered area between w/ and w*, which is eDual to shaded area, a3 &mmigrants gain additional income eDual to b, and other factors capital, etc3! gain area c3
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20-Mar-14
(eri claims that their findings are robust to including several control variables individually such as N2; spending, technological adoption, sector composition, openness to international trade, or sector composition!, and they are not e+plained by productivity convergence across states or driven by a few states or particular period of time3 (eri conjectures that at least a part of the positive productivity effects are due to an efficient specialiAation of immigrants and natives in manual%intensive and communication%intensive tasks, respectively in which each group has a comparative advantage!, resulting in a gain in overall efficiency3 Net inflow of immigrants, even those driven by their historical location and pro+imity to the border Me+ican%)merican border!, is associated with significant productivity gains for the receiving states3
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&f negative e+ternality prevail, wage rate will fall even more heavily from w/ to w# then to w*!3 &n this situation, even the usually positive Gimmigration surplusH may be wiped out, if, as shown in the above figure, area f is greater then g fVg!
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