07.18.2013 - Michael Clemens
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Transcript of 07.18.2013 - Michael Clemens
Measuring native displacement by foreign labor:A job-specific approach and
application to North Carolina farms
Michael A. ClemensCGD & NYU FAI
July 18, 2013 · IFPRI
Outline
Why a new approach
Empirical strategy
Setting and data
Results
Outline
Why a new approach
Empirical strategy
Setting and data
Results
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Existing approaches
‘Area’ approach (Card 1990, . . . )
‘Factor proportions’ approach (Borjas 2003 . . . )
Challenges
→ Causation
→ Mechanism
→ Native self-selection
→ Connection to policy
Employment effects and native labor supply
y = f(θg(N ,M)
),
where g =(Nρ + γMρ
) 1ρ
(1)
Π ≡ f (θg)− wNN − wMM (2)
ln f ′ + ln gN = lnwN − ln θ (3)
M s fixed;N s = ξ(wN)ε
(4)
NM = φ(ε, ·)(θf ′′
f ′gM +
gNMgM
)(5)
Employment effects and native labor supply
y = f(θg(N ,M)
),
where g =(Nρ + γMρ
) 1ρ
(1)
Π ≡ f (θg)− wNN − wMM (2)
ln f ′ + ln gN = lnwN − ln θ (3)
M s fixed;N s = ξ(wN)ε
(4)
NM = φ(ε, ·)(θf ′′
f ′gM +
gNMgM
)(5)
Employment effects and native labor supply
y = f(θg(N ,M)
),
where g =(Nρ + γMρ
) 1ρ
(1)
Π ≡ f (θg)− wNN − wMM (2)
ln f ′ + ln gN = lnwN − ln θ (3)
M s fixed;N s = ξ(wN)ε
(4)
NM = φ(ε, ·)(θf ′′
f ′gM +
gNMgM
)(5)
Employment effects and native labor supply
y = f(θg(N ,M)
),
where g =(Nρ + γMρ
) 1ρ
(1)
Π ≡ f (θg)− wNN − wMM (2)
ln f ′ + ln gN = lnwN − ln θ (3)
M s fixed;N s = ξ(wN)ε
(4)
NM = φ(ε, ·)(θf ′′
f ′gM +
gNMgM
)(5)
Employment effects and native labor supply
y = f(θg(N ,M)
),
where g =(Nρ + γMρ
) 1ρ
(1)
Π ≡ f (θg)− wNN − wMM (2)
ln f ′ + ln gN = lnwN − ln θ (3)
M s fixed;N s = ξ(wN)ε
(4)
NM = φ(ε, ·)(θf ′′
f ′gM +
gNMgM
)(5)
Outline
Why a new approach
Empirical strategy
Setting and data
Results
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
Two natural experiments
N s level: Obligatory demand for citizen labor
→ H-2A visa, no limit to foreign labor supply
→ Perfect substitutes at ‘Adverse Effect’ Wage
→ Foreign Labor Certification requirements
N s slope: Shock to reserve option in recession
→ max{C ,L} U = C 1−βLβ s.t. C + wL = wL̄ + R
→ ns,i =
{0 if w
R < β1−β
1L̄;
(1− β)L̄− β · Rw if wR > β
1−β1L̄.
NC unemployment, by DES office & statewide
Outline
Why a new approach
Empirical strategy
Setting and data
Results
North Carolina Growers Association
North Carolina Growers Association
Overview of Mexican H-2A Workers at NCGA
Year Number Months/worker
2004 6799 4.454
2005 5602 4.527
2006 4786 4.571
2007 5410 4.797
2008 5969 5.233
2009 6237 5.084
2010 6201 5.613
2011 6474 5.496
2012 7008 5.506
Mean 6054 5.054
Number of workers shows number of unique individuals starting one or more H-2A employment events in eachcalendar year. Months/worker shows average months of work by each individual. ‘Mean’ row covers 2004–2012.
Overview of DES office referrals
Unemp. DES to all employers
Rate N New Referred
Year (%) apps Non-ag. Ag.
1998 3.53 140782 – – –1999 3.27 132707 – – –2000 3.75 154577 – – –2001 5.64 234934 – – –2002 6.63 279281 – – –2003 6.45 274193 – – –2004 5.54 236328 – – –2005 5.26 229030 – – –2006 4.74 212099 236011 1642996 408802007 4.71 213276 238386 1586462 409242008 6.19 283048 256865 1498566 329582009 10.76 490010 276978 1396083 271682010 10.94 504885 267076 1604416 322452011 10.51 489095 – – –2012 9.52 446469 – – –
Overview of DES office referrals
Unemp. DES to NCGA
Rate N Referred Hired Started Complete UnknownYear (%)
1998 3.53 140782 112 98 14 0 251999 3.27 132707 41 39 6 0 32000 3.75 154577 35 34 4 0 12001 5.64 234934 46 44 13 0 02002 6.63 279281 99 91 43 2 22003 6.45 274193 244 242 83 3 02004 5.54 236328 134 134 37 2 32005 5.26 229030 57 57 22 6 22006 4.74 212099 88 88 22 10 152007 4.71 213276 – – – – –2008 6.19 283048 170 167 58 11 502009 10.76 490010 108 105 48 6 02010 10.94 504885 74 73 30 10 102011 10.51 489095 268 245 163 7 02012 9.52 446469 253 213 143 10 0
Average NCGA H-2A employment events per year
Avg. U.S. referrals/yr (residence) & DES offices
Average unemployment rate in 2011 (%)
Outline
Why a new approach
Empirical strategy
Setting and data
ResultsNative labor supply: Extensive marginNative labor supply: Intensive marginEffects on native employment
Effects of the recession on job referrals
All ag. jobs NCGA jobs
Referred Placed Referred Hired Started Completed
Unemployment (%) −2.398∗ −0.417 0.0122∗∗ 0.0108∗∗ 0.00909∗∗ −0.000281(1.019) (0.519) (0.00410) (0.00381) (0.00289) (0.000465)
New applications (000s), t 345.7∗ 258.0 −0.260 −0.240 −0.208 −0.00985(168.3) (146.1) (0.168) (0.155) (0.120) (0.0144)
” t − 1 45.26 76.21 −0.343∗ −0.323∗ −0.189∗∗ −0.0258(29.50) (45.29) (0.145) (0.142) (0.0731) (0.0207)
” t − 2 −33.14 −36.53 −0.376∗ −0.349∗ −0.173 −0.0251(30.14) (27.29) (0.176) (0.172) (0.0955) (0.0195)
” t − 3 −29.22 −53.81 −0.548∗∗ −0.547∗∗ −0.309∗∗ −0.0298∗
(19.56) (32.93) (0.176) (0.168) (0.113) (0.0146)” t − 4 −29.11∗ −26.57 −0.333∗ −0.296∗ −0.136∗ −0.00699
(12.89) (15.20) (0.133) (0.127) (0.0545) (0.0167)” t − 5 −55.91∗∗ −49.36∗ −0.390∗ −0.396∗ −0.156 −0.0394∗
(21.43) (20.50) (0.169) (0.167) (0.0831) (0.0185)” t − 6 −57.18∗∗ −45.91∗∗ 0.375∗ 0.384∗ 0.161∗∗ 0.00613
(19.32) (16.93) (0.171) (0.171) (0.0542) (0.00929)” t − 7 −50.86∗ −52.23∗ 0.459 0.455 0.277∗ 0.108
(23.17) (22.66) (0.266) (0.271) (0.137) (0.0664)” t − 8 −28.65 −48.62 0.769∗ 0.731∗ 0.492 0.0212∗
(15.82) (25.34) (0.326) (0.321) (0.253) (0.0103)” t − 9 1.086 14.74 0.219 0.189 0.0361 −0.0340
(12.44) (10.51) (0.288) (0.266) (0.234) (0.0404)” t − 10 −49.35 −22.89 0.385∗ 0.362∗ 0.163∗ 0.0296
(43.45) (35.70) (0.161) (0.150) (0.0808) (0.0327)
Constant 41.86∗∗∗ 20.26∗∗ 0.0779 0.0781 0.0117 0.0141∗
(11.36) (7.005) (0.0412) (0.0403) (0.0168) (0.00688)
N 3828 3828 3828 3828 3828 3828
Marginal effects of unemployment rate on U.S.
labor supply to NCGA (State total/yr)
U.S. workers, from referral to start date
U.S. workers, from referral to start date
U.S. & Mexican, from start to quit/fired
U.S. only, from start to quit/fired
Missing observations on outcome and duration
U.S. worker duration Mexican worker duration
Not missing Missing Not missing Missing
Outcome:Completed 67 1 56505 0Quit 488 100 2285 0Fired 31 7 2464 1Unknown 0 111 0 126
Rough estimates of MRP of manual labor
Crop Cucumber Sweet potato Tobacco
Year 2002 2013 2002 2012 2009
Revenue/acre ($) 2040.00 2325.00 2637.50 3375.00 4050.00Non-labor cost/acre ($) 806.17 1168.20 1485.82 1696.56 2627.95
Hours/acre 80 80 50 50 60
Revenue/acre/hr ($) 25.50 29.06 52.75 67.50 67.50Non-labor cost/acre/hr ($) 10.08 14.60 29.72 33.93 43.80Labor cost/acre/hr ($) 10.54 13.58 10.54 13.58 13.08
Cost fraction 0.51 0.48 0.26 0.29 0.23
NCGA wage/hour ($) 7.53 9.70 7.53 9.70 9.34
Short run, zero substitution (Leontief)MRP/hr/acre ($) 25.50 29.06 52.75 67.50 67.50
Multiple of wage 3.39 3.00 7.01 6.96 7.23
Long run, unit elasticity of substitution (Cobb-Douglas)MRP/hr/acre ($) 13.04 14.00 13.81 19.29 15.52
Multiple of wage 1.73 1.44 1.83 1.99 1.66
Statewide US job creation by 6,500 H-2A workers
Short run Long run
low high low high
MRP multiplier 4 6 2 3
Total wage bill ($m) 74.7 74.7 74.7 74.7
Revenue product ($m) 298.8 448.1 149.4 224.1
Output multiplier 1.657 1.657 1.657 1.657
Effect on NC GDP ($m) $495 $743 $248 $371
Jobs multiplier 9.527 9.527 9.527 9.527
US jobs created in NC 2846 4269 1423 2135
H-2A workers per US job 2.3 1.5 4.6 3.0
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