This paper re-examines the area approach in estimating the elasticity of substitution between native-born and foreign-born workers. The area approach compares native-born workers' wages in metropolitan areas with small inflows of immigrant workers to metropolitan areas with large immigrant inflows. Using a nested CES production function, it finds that immigrants and native-born workers are imperfect substitutes. The study, using the estimated parameters for the elasticity of substitution between − immigrants and workers, workers with different experience groups, and workers across different education levels, estimates that immigrant labor shocks have negligible and even positive increases on native-born workers' weekly wages
