Immigration: The Effects on Low-Skilled and High-Skilled Native-Born Workers

The large influx of immigrants in recent decades has led to an equally long, still unresolved debate over their effect on the labor market outcomes of native-born workers. Economic theory posits that an increase in the supply of labor, such as from immigration, will reduce the wages and employment of native-born workers. Studies, utilizing two approaches to test the theory, have produced conflicting results with differing implications for public policy. The concentration of foreign-born workers in certain cities and skill groups led some economists to posit that immigration’s greatest impact would be felt by similarly skilled native-born workers living in those areas. Studies thus have compared differences in labor market outcomes between native-born workers who live in high- versus low-immigrant areas and who most often compete for jobs with foreign-born workers; given the composition of the recent immigrant flow, these would be low-skilled U.S. workers. Most inter-area analyses have found scant evidence that foreign-born labor adversely affects the labor market prospects of U.S. workers in general. A few inter-area studies have estimated a slight negative impact on low-skilled natives—who represent a small share of total U.S. employment. Other economists have argued that the inter-area approach underestimates immigration’s consequences because it assumes that labor, capital, and goods do not rapidly adjust to the immigration-induced increase in the supply of labor. If, for example, native-born competitors quickly decide to leave high-immigrant areas, their movements would spread any employment and wage effects due to immigration across the nation, and thereby make it difficult for spatially based research to detect any impact. Some analysts, therefore, have concluded that immigration’s labor market effects can best be identified by examining data at the national level. The economy-wide approach is not without its limitations, however. The relationship between internal labor migration and immigration remains unsettled as well. Several national studies have estimated that immigration, given its composition in recent decades, has hurt—albeit to differing degrees—the labor market opportunities of the least skilled and experienced U.S. workers. If a policy goal is to improve the prospects of U.S. workers who have not graduated from high school, this research suggests that changing the skill composition of legal immigrants and reducing the flow of unauthorized aliens might be fruitful courses of action. However, some of the very limited number of analyses that focus on high-skilled workers in particular (e.g., those in computer science and engineering fields) estimate that an increase in foreign labor adversely affects comparably skilled native-born workers. Thus, shifting the immigrant supply toward higher-skilled workers might not only harm this native-born skill group, but also undercut the most often recommended means of ameliorating immigration’s impact on low-skilled U.S. workers, namely, pursuing additional education

Analyzing the Extent and Influence of Occupational Licensing on the Labor Market

This study examines the extent and influence of occupational licensing in the U.S. using a specially designed national labor force survey. Specifically, we provide new ways of measuring occupational licensing and consider what types of regulatory requirements and what level of government oversight contribute to wage gains and variability. Estimates from the survey indicated that 35 percent of employees were either licensed or certified by the government, and that 29 percent were fully licensed. Another 3 percent stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38 percent. We find that licensing is associated with about 18 percent higher wages, but the effect of governmental certification on pay is much smaller. Licensing by larger political jurisdictions is associated with higher wage gains relative to only local licensing. We find little association between licensing and the variance of wages, in contrast to unions. Overall, our results show that occupational licensing is an important labor market phenomenon that can be measured in labor force surveys.occupational licensing, labor market institutions, labor market data, wages and labor market institutions, wage inequality and labor market institutions

Liberalizing Professional Services: Evidence from Italian Lawyers

This paper presents a new model of occupational licensing, where producers are heterogeneous both in their ability or productivity and in the level of the barriers to entry in the profession that they face. The model bears important implications on the effects of liberalization policies that differ dramatically from those implied by the standard model, where heterogeneity is unidimensional in productivity. Specifically, we find that liberalization policies induce higher quality of services if barriers to entry are high for the most able agents. The opposite if such a correlation is low. We test these implications using detailed microdata on Italian lawyers and find a strong effect of the 2006 Italian liberalizing reform on the composition of the outflows from the legal profession. While higher ability lawyers are more likely to leave the profession before the reform, the opposite happens in its aftermaths, consistently with the idea that monopoly power selects high-productivity lawyers out of the profession

Analyzing the Extent and Influence of Occupational Licensing on the Labor Market

This study examines the extent and influence of occupational licensing in the U.S. using a specially designed national labor force survey. Specifically, we provide new ways of measuring occupational licensing and consider what types of regulatory requirements and what level of government oversight contribute to wage gains and variability. Estimates from the survey indicated that 35 percent of employees were either licensed or certified by the government, and that 29 percent were fully licensed. Another 3 percent stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38 percent. We find that licensing is associated with about 18 percent higher wages, but the effect of governmental certification on pay is much smaller. Licensing by larger political jurisdictions is associated with the higher wage gains relative to only local licensing. We find little association between licensing and the variance of wages, in contrast to unions. Overall, our results show that occupational licensing is an important labor market phenomenon that can be measured in labor force surveys.occupational licensing, United States, Labor force, wage variance

The labor market experience and impact of undocumented workers

Using administrative data from the state of Georgia, the authors find that average wages among documented workers are lower in industries that employ undocumented workers and that a greater share of undocumented workers in those industries further lowers wages. In addition, undocumented workers have significantly lower labor supply elasticity, likely as a result of their limited employment and grievance opportunities. Furthermore, the inflow of undocumented workers does more to displace earlier hired undocumented workers than it does to displace documented workers.Immigrants

How Low-skilled Immigration is Changing US Prices and Labor Markets: 3 Essays - Dissertation Summary

This dissertation consists of three essays on the effects of low-skilled immigration on U.S. prices and labor markets. The first essay uses confidential data from the Consumer Price Index to estimate the causal effect of low-skilled immigration on the prices of nontraded goods. The second essay is motivated by the first essay’s finding that low-skilled immigration reduces the prices of services such as housekeeping and babysitting, and explores whether American women have substituted their own time invested in the production of household goods with the purchase of the now cheaper household services, and if, as a consequence, they have increased their labor supply. The third essay formalizes and empirically explores how immigrants’ lack of English skills determines immigration’s impact on the U.S. labor market

Reveille 2011

https://digital.kenyon.edu/reveille/1053/thumbnail.jp