Labor 2014 Recitation 4 v 3

8/11/2019 Labor 2014 Recitation 4 v 3

1/16

14.661 Recitation 4:Do Immigrants Hurt Americans?

Card-Altonji (1991)

Yusuke Narita

October 2, 2014

Yusuke Narita 14.661 Recitation 4: Do Immigrants Hurt Americans?Card-Altonj


2/16

Question

Do immigrants crowd out natives &/or decrease their wages?

Numerous cross-sectional & DiD papers in labor & deve

Approach 1: Geographic variation in immigration inflow:Cards Miami paper, Card-Altonji (91)

todays focus

etc

endless controversy

Approach 2: Variation across demographic groups over time:Borjas (03) etc



3/16

Theoretical Framework of Card-Altonji (91)

Many others focus on immigrants effect on labor market alone

But immigrants not only work but also eati.e. have both labor supply & goods demand effects

need for a joint model of labor & goods markets

local market model with a single (local) good & 4 types of labor

Native Immigrant

High Skill Homogeneous/Perfect SubstitutesLow Skill Homogeneous/Perfect Substitutes

Fix # of workers of each type & then add immigrants



4/16

Good Market

A single (local) good produced by competitive firms with CRSproduction function & unit cost function c(wages, wu)

Market clearing condition:

good supply Y=

good demand Ds(price, ws)

demand by skilled

+ Du(price, wu)

by unskilled

+ Dx(price)

export



5/16

Labor Market

Market clearing condition:

skilled labor supply Ls(price, ws)=

skilled labor demand Yc(ws, wu)ws

unskilled labor supply Lu(price, wu)=

unskilled labor demand Yc(ws, wu)wu



6/16

What Happens if I Immigrants Come to the Town?

Assume cross elasticities of good demand & labor supply=0.Can differentiate market clearing conditions to get

a original % of unskilled while new %

Recall law of factor demand (Hicks-Marshall rules):ij=j(ij )



7/16

Suggested Empirical Strategy

Can combine (3.ab) & the law into

log wageu=BuI/Plog(per capita labor supply)u=uBuI/P

where the coefficient is a complex function of parameters:

suggestRegress log wageu& log(per capita labor supply)u on I

Data: 1970 & 80 Census on low skill natives of age 19-64 in 120major cities (Standard Metropolitan Statistical Area; SMSA)



8/16

4 Low Skill Natives Groups & Outcomes

Different groupswith differentage/educ/outcomes



9/16

4 Low Skill Natives Groups & Outcomes

Groups face different levels of competition w/ immigrantsBlack women are most competitive



10/16

Main Results

Lets control for differences across groups

Xgroup,

city: groups age & edu, citys population, interactionsYgroup,city =

of interest

(% of immigrants)city+Xgroup,city+ group,city



11/16

Main Results

Yg,c=

of interest

(% of immigrants)c+Xg,c+g,c



12/16

Main Results

Yg,c=

of interest

(% of immigrants)c+Xg,c+g,c

(% of immigrants)cIVed for by (% of immigrants)c in 1970 &its square (Bartel (89)s IV, also used in Card (09))



13/16

Heterogeneous Effects?

Estimates remain unstable even if restricting sample to each group



14/16

Do Immigrants Hurt Immigrants?

(immigrant wage)g,c=(% of immigrants)c+Xg,c+g,c(% of immigrants)cIVed for by (% of immigrants)c in 70 & its

square



15/16

Takeaway & Concern

Takeaway

Ambiguous unstable answers to do immigrants hurt natives?

Effects on wage relatively more negative than on employment

Concern

Cross-city variation may be badly contaminated byendogenous city choices by immigrants Need for alternative approaches



16/16

Preview of the Next Lecture


Labor 2014 Recitation 4 v 3

Documents

Transcript of Labor 2014 Recitation 4 v 3