Resumen de The economic impact, location choices and assimilation of immigrants
This dissertation consists of three self-contained essays on immigrants' economic impact, location choices and wage assimilation in the US. Chapter 1 studies the labor market impact of low-skilled undocumented immigration in contrast to documented immigration; Chapter 2 investigates the location choices of immigrants and their consequences for the distribution of economic activity across cities; Chapter 3 proposes a novel framework that allows both skill accumulation and general equilibrium effects to account for changes in the wage assimilation patterns of immigrant arrival cohorts over time.
In the first chapter, I study the labor market impact of documented and undocumented immigration in a model with search frictions and non-random hiring. Since immigrants accept lower wages, firms obtain a higher match surplus from hiring immigrants rather than natives. Therefore, immigration results in the creation of additional jobs, but it also raises job competition. Whether job creation or competition is the dominating effect depends on the size of the induced fall in expected wages paid by firms. Using US data, I show in my empirical analysis that among low-skilled workers undocumented immigrants earn 8% less and have a 7 ppt higher job finding rate than documented immigrants. Parameterizing the model based on these estimates, I find that the job creation effect of undocumented immigration dominates the job competition effect and leads to gains in terms of both employment and wages for native workers. In contrast, documented immigration leads to a fall in natives' employment due to its weaker job creation effect. A policy of stricter immigration enforcement, simulated by a rise in the deportation rate of undocumented workers, decreases firms' expected match surplus, mutes job creation and thus raises the unemployment rates of all workers.
In the second chapter, co-authored with Joan Monras, we investigate the causes and effects of the spatial distribution of immigrants across US cities. We document that: a) immigrants concentrate in large, high-wage, expensive cities, b) the earnings gap between immigrants and natives is higher in larger, more expensive cities, and c) immigrants consume less locally than natives. In order to explain these findings, we develop a quantitative spatial equilibrium model in which immigrants consume a fraction of their income in their countries of origin. Thus, immigrants care not only about local prices, but also about price levels in their home countries. This gives them a comparative advantage relative to natives for living in high-wage, high-price, high-productivity cities, where they also accept lower wages than natives. These incentives are stronger for immigrants coming from lower-price index countries of origin. We rely on immigrant heterogeneity to estimate the model. With the estimated model, we show that current levels of immigration have reduced economic activity in smaller, less productive cities by around 5 percent, while they have expanded it in large, productive cities by around 6 percent. This has increased total aggregate output per worker by around 0.3 percent. We also discuss the welfare implications of these results.
In the third chapter, co-authored with Albrecht Glitz and Joan Llull, we propose a unified framework for the prediction of wage assimilation patterns that is based on the idea that earnings of immigrants not only depend on how close they are to natives with respect to their skills, but also on the amount of competition from workers offering similar skills. Thus, we combine the approaches of the literature on immigrant wage assimilation and the literature on the labor market impact of immigration by allowing for both the accumulation of host country specific skills and general equilibrium effects. Output is produced using imperfectly substitutable native and immigrant skill units, whereby immigrants can accumulate native units over time. The relative remuneration of the skill units depends on their total relative supply in the economy. Therefore, the wage gaps between natives and immigrants reflect both individual skills and the degree of labor market competition. After estimating the model using decennial US data from 1970 to 2010, from which we obtain an elasticity of substitution between native and immigrant labor around 13, we simulate counterfactual assimilation profiles by fixing the total skill supplies across arrival cohorts and compare them to the actual profiles. We find that 31\% of the decline in entry wages experienced by the cohorts entering in the 1970s, 1980s and 63\% of the decline experienced by the cohort entering in the 1990s can be explained by shifts in the relative supplies due to rising immigrant inflows in the US since the 1960s.
