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THE EFFECT OF IMMIGRATION ON ETHNIC COMPOSITION AND OCCUPATIONAL REALLOCATION

By Arindrajit Dube, Shruti Kapoor and Todd Sorensen

Abstract

Over the last 30 years, the U.S. labor market has been transformed by the ’second great migration’. Much of this immigration has been among the lower skilled; the share of High School Dropout (HSD) workers who are foreign born increased from 12 % in 1980 to 44 % in 2007. At the same time, native born HSD workers grew more slowly than any other educational category, falling by nearly 6%. These two outcomes have inevitably lead to much speculation that immigrants depress the wages of similarly skilled natives. The labor economics literature, however, has found little empirical evidence to support this claim. We aim to assess whether the impact of immigration is mitigated by occupational transition of natives. Being over represented among HSDs, we focus on the labor market outcomes for Black workers. We use data from the 5 % public use sample of the census(1980, 1990 and 2000) as well as the 1 % sample of the population from the American Community Survey (2005, 2006 and 2007) to estimate the effect of occupational reallocation on the wages of Black workers as well as the effect of immigration on reallocation. A shift-share analysis reveals that occupational transitions caused wages for Blacks to raise by 46 % more than they would have with a static occupational distribution. However, we find that these occupational shifts were due to crowding out effect of Hispanics on Black occupations: a 10 percentage point increase in the share of workers in an occupation who are Hispanics leads to a 5 percentage point decrease in the share of Black workers in that occupation. This is significantly large to explain substantially occupations that declined in importance for Blacks during the period of study. We find a strong correlation between importance of occupations to Hispanics and Blacks, suggesting that most occupational transition for these two groups has not only been driven by outside factors such as trade and 1 technological change, but that these shocks are affecting the two groups similarly. Preliminary draft, please do not cite. Comments are welcome ( Research has been supported by a grant from the University of Californi

Year: 2009
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