Immigration Economics: A Review 

David Card      Giovanni Peri UC Berkeley    UC Davis and NBER    and NBER 

 April, 2016 

 

Abstract 

We review Immigration Economics (IE) by George J. Borjas, published in 2014 by Harvard 

University Press. The book is written as a graduate level textbook, and summarizes and updates 

many of Borjas' important contributions to the field over the past 30 years. A key message of 

the book is that immigration poses significant costs to many members of the host‐country labor 

market. Though the theoretical and econometric approaches presented in the book will be very 

useful for students and specialists in the field, we argue that book presents a one‐sided view of 

immigration, with little or no attention to the growing body of work that offers a more nuanced 

picture of how immigrants fit into the host country market and affect native workers. 

 

*We are extremely grateful to Gaetano Basso and Ingrid Hägele for their assistance. 

  

1

Immigration Economics: A Review

GeorgeBorjasistheleadingeconomicscholarofimmigration.Overthepastthree

decadeshehasauthoredorco‐authoreddozensofpapersthathaveopenedupnewlinesof

investigationandhelpframethewaythateconomiststhinkaboutimmigration.Hehasalso

writtentwopreviousbooksonthetopic–Friends or Strangers? The Impact of Immigrants

on the U.S. Economyin1990,andHeaven’s Door: Immigration Policy and the American

Economyin1999–andcontributedimportantreviewstotheJournal of Economic

LiteratureandtheHandbook of Labor Economics.

Borjas’newbook,ImmigrationEconomics(IE),summarizesmuchofhispastwork,

updatingtheempiricalworkinsomeofhisseminalpapersandaddressingconcernsthat

havebeenraisedbyotherresearchers(includingus).IEiswrittenasagraduate‐level

textbook,carefullylayingoutaseriesofneoclassicalmodelsanddescribingempirical

methodsindetail.Ittakesatechnical/pedagogicalapproach,withcomprehensive

footnotesandappendicesandextendeddiscussionsofproblemslikeimputationerrorand

attenuationbias.Itveryrarelytalksaboutpolicyimplicationsandnevertakesapolitical

stand.Thisisabookforscholarsandadvancedstudentsofeconomics,ratherthanpolicy‐

makersorthegeneralpublic.Becauseofthisfocus,IEhasthepotentialtoserveasa

referenceforthoseinterestedinunderstandingthestateoftheartinthemodelingand

statisticalanalysisofmanyimmigration‐relatedissues.

Thecontentsofthebook'sninechapters,andtheirrelationshiptoBorjas'previous

work,aresummarizedinTable1.ApartfromChapter3,whichisentirelytheoretical,each

chapterisfocusedaroundoneortwokeysubstantivequestions,typicallystartingwitha

simplemodel,thenpresentingsomebasicdescriptiveevidence,andultimatelydiscussing

2

detailedtablesofeconometricestimates.1AsisclearfromTable1,IEfocusesalmost

exclusivelyonthelabormarket,specificallyonunderstandingthedeterminantsof

immigrants'earnings(Chapters1and2),oftheirchildren'searnings(Chapter9)andthe

impactsofimmigrantarrivalsonnativeearnings(Chapters3‐8).Eachchapterisbasedon

oneortwoofBorjas'earlierpapers.Readerswhoarefamiliarwiththeearlierpaperswill

findthatthestoryhasnotchanged,thoughthemodelpresentationinIEisstreamlined

(andsometimesgeneralized),theempiricalanalysisisoftenupdated,andthereissome

discussionoftheinterveningliterature.

ThemainachievementofIEisitscomprehensiveperspectiveonthelabormarket

aspectsofimmigration.Intheintroductionofthebook,Borjasdescribeshiscentraltheme

asthis:

"... immigration has consequences, and these consequences generally imply that some

people lose while others benefit...” (page4)

AsaglanceatthethirdcolumnofTable1suggests,thisthemeisparticularlyclearinthe

corechaptersonlabormarketimpacts,whereBorjas'theoreticalmodel(Chapter3),

descriptiveevidence(Chapter4),baselinesimulations(Chapter5),andcasestudiesofhigh

skilledimmigration(Chapter8)allunderscorethecostsofimmigrationforcompeting

nativeworkers.

GiventhecentralimportancethatBorjasattachestotheissueoflabormarket

impacts,inthisreviewweconcentrateonthesecorechapters.Themodelingand

interpretationoflabormarketimpactsisanareawhereeconomicsismostinneedof

1 The models in IE are not "structural" in the modern sense of providing a complete specification of the data generating process for the data under consideration. Rather, Borjas specifies a simple model -- e.g., an aggregate production function -- and then estimates equations that can be interpreted as stochastic approximations of the relations implied by the model.

3

consensus,wheresimplecorrelationscanhelpusunderstandthedata,andwherethe

lessonsfromtheanalysisofimmigrationhavethestrongestspilloverstootherfields

includingurbaneconomicsandproductivityanalysis.Thisisalsothemainareawhereour

ownresearchonimmigrationhasbeenfocused.

I. Descriptive Correlations

AsignificantpartofIEistakenupwithbasicdescriptivecorrelationsbetweenthe

presenceofimmigrantsandthelabormarketoutcomesofnatives.Chapter4isentirely

devotedtodocumentingthesecorrelations;theyalsofillasubstantialshareofChapter6.

ThesecorrelationsshapeBorjas'structuralmodelingchoicesandframehisdiscussionof

theliterature.Thereforeitisimportanttounderstandthespecificcorrelationsthathe

choosestofocuson.

a. What Are the Descriptive Correlations of Interest?

Althoughonemighthopethatanalystscouldagreeonthebasiccorrelationsthat

needtobeexplainedbyasuccessfulmodelofimmigrantimpacts,thisisnotthecase.

Rather,differencesinopinionoverthedescriptivecorrelationsofinteresthavebeen

centraltotheongoingdebateintheliteratureaboutthewageeffectsofimmigrationand

theimpactofimmigrantsonnativemobility.2Sincethisistheareawherewehavethe

mostreservationsaboutthematerialpresentedinIE,webeginbydescribinginsomedetail

ourdifferencesofopinionwithBorjas.

2 See Peri and Sparber (2011) for a discussion in the context of mobility responses to immigration. See also Card and DiNardo (2000).

4

Mostmodernempiricalstudiesofimmigrantimpactsbeginbyassumingthat

immigrantsandnativescanbeclassifiedintoarelativelysmallnumberofskillgroups,and

proceedtomodelimmigrationasashiftinthesupplyofdifferenttypesoflabor.Thisis

preciselythestartingpointofthetheoreticalanalysisinChapter3ofIE,whereBorjas

(equation3.8)definestherelativeshiftinthesupplyoflaborofskillgroupidueto

immigrationas:

i

ii L

dLm , (1)

whereLi representsthesizeoftheinitiallaborforceoftypei workersanddLiisthechange

inthistypeofworkersduetoimmigration.AsBorjasshowsinthisthoroughbutconcise

chapter,withconstantreturns‐to‐scaleintheaggregateproductionfunction,theimpactsof

immigrantinflowsareentirelyafunctionoftheserelativesupplyshifts.

Inlightofthistheoreticalframework,itseemsmostnatural(tous)todevelop

descriptiveevidencerelatingnativelabormarketoutcomestotheempiricalanaloguesof

thesesupplyshifts.3Specifically,ifweletMitrepresentthenumberofimmigrantworkers

inskillgroupi inagivenlabormarketinyeart,andletNitrepresentthecorresponding

numberofnativeworkers,theempiricalequivalentof(1),measuredindiscretetime‐

changesbetweencensusyearst‐10andt,is:

101010

10

it

it

itit

ititit L

M

MN

MMm (2)

3 Consistent with this reasoning, in Chapter 4 Borjas defines the "relevant wage elasticity" from his descriptive models as the derivative of the log wage of a given skill group with respect to the "immigration-induced percent increase in the labor supply of (the) group" (p. 85).

5

Astraightforwarddescriptiveanalysisbasedon(2)canbeconductedbyrelatingthe

changesinthemeasuredoutcomesofnativesofagivenskillgroupinagivenlabormarket

totheircorrespondingsupplyshocksduetoimmigration:

ititm

ititit mgroupskilltimeeffectsfixedyyy ),(10 (3)

where"fixed effects(time, skill group)"referstoaseriesofcontrolsforthetimeperiodand

skillgroupunderconsideration.

Incontrasttothisapproach,throughoutthedifferentchaptersofIEBorjasrelates

theoutcomesofnativeworkerstothefraction of immigrantsintheirskillgroupand

labormarketinyeart:

itit

itit MN

Mp

(4)

ThischoicewasusedinBorjas(2003)andseveralsubsequentpapers(Borjas2006,2009;

AydemirandBorjas,2007),andbyothereconomistswhoseworkiscitedinChapter4ofIE,

includingBonin(2011),Bratsbergetal.,(2012)andSteinhardt(2011).Ratherthan

relatingthechangesinlabormarketoutcomesofnativestothecorrespondingimmigrant‐

inducedsupplychanges,Borjasfitsdescriptivemodelsoftheform:

ititp

it pgroupskilltimemarketeffectsfixedy ),,( (5)

wherethesetoffixedeffectsisexpandedtoincludecontrolsforthelabormarketunder

consideration.

Withmarket‐specificfixedeffects,estimatesbasedonequation(5)are

approximatelyequivalenttoestimatingfirstdifferencedmodelsinwhichthekey

6

dependentvariableisthechangeinthefractionofimmigrantsinagivenskillgroupand

labormarket:4

ititp

it pgroupskilltimeeffectsfixedy ),( (6)

Superficially,thislooksalotlikeequation(3),andonemightbetemptedtothinkthatthe

twospecificationsareroughlyequivalent.Unfortunately,thatisnotthecase,andthe

differenceleadstodramaticallydifferentconclusionsaboutthedescriptivecorrelations

betweenimmigrantinflowsandnativelabormarketoutcomes,aswedocumentbelow.

Tounderstandthereasonsforthedifference,considerthefirst‐order

approximationtothechangeintheratiopit:

10

1010

10 )1(

it

itit

it

ititit L

Np

L

Mpp (7)

Tofirstorder,thechangeintheimmigrantshareisaweightedaverageoftheimmigrant‐

drivensupplyshock(10

it

it

L

M) andthechangeinthenumberofnative workersinskillgroup

i, dividedbythelaggedsizeofthegroup(10

it

it

L

N).5Sincenativelabormarketoutcomesare

ontheleft‐handsideofequation(6)itisextremelyimportantnottoconfoundthesenative

supplychangeswiththeimmigrantsupplyshocksthatarethefundamentalexogenous

variablesofinterest.

4 With only 2 periods, including market-specific fixed effects or first differencing within markets are exactly equivalent. With more periods, the first differences specification is somewhat more flexible, but would be expected to yield similar estimates of the key coefficient βp. 5 Equation (7) is only a first order approximation. Hence it is more accurate for small changes. For many US labor markets over 10 year intervals, like those analyzed in IE, large changes occurred, in which case a second order term (incorporating interactions of the changes in native and immigrant workers) is needed. Omission of this second order term will lead to additional biases.

7

Aparticularlytroublesomesourceofcorrelationcanariseifchangesinthenumber

ofnativeworkersinagivenskillgrouparepositivelycorrelatedwithchangesintheir

wages.Suchapositivecorrelationwillarisenaturallyiftherearerelativedemandshocks

inagivenmarketthatraisewagesanddrawinnewnativeworkers.Itispreciselybecause

ofconcernsoverthesetypesofshocks,whichcanleadtoapositive biasinthepartial

correlationbetweennativewagesandimmigrantinflows,thatresearchershaveattempted

todeviseinstrumentalvariablesfortherelativeinflowrateofimmigrantstodifferentlabor

markets(e.g.,AltonjiandCard,1991;Card,2001).Ironically,byusingpit asthemeasureof

immigrantmarketpressure,thispositivebiasleadstoanegative biasinthedescriptive

partialcorrelationspresentedinChapter4ofIE.Thisbiaswillbelarger,thelargerthe

initialshareofimmigrantsinthelabormarket, 10itp .

Evenmorealarmingisthespuriouscorrelationinducedbythisspecificationforthe

nativemobilitymodelspresentedinChapter6ofIE.Inthesemodels(reportedinTable

6.1)thedependent variableisthechangeinthenumberofnativesinagivenskillgroup,

orthecomponentofthechangeattributabletoout‐migrationorin‐migration.Essentially,

thesemodelsareequivalenttospecificationslike:

ititp

it

it peffectsfixedL

N

10

(8)

Inlightofequation(7),however,thedependentvariableismechanicallynegatively

correlatedwiththeindependentvariable.Asweshowinthenextsection,theresulting

estimatesbearlittlerelationshiptoestimatesfromthemoreappropriatespecificationwith

theimmigrant‐drivensupplyshockmitastheexplanatoryvariable.

8

ThesameissuespillsovertosomeofBorjas'structuralestimates.Specifically,in

Chapter6ofIE,hepresentsabehavioralmodeloflocationdecisionsbynativeworkers.

Thedependentvariableofthemainestimatingequation(equation6.5)isthechangeinthe

numberofnativeworkersinagivenskillgroup,standardizedbytheinitialsupplyoflabor

inthisskillgroup.Thekeyindependentvariableisthecumulatedchangeinthenumberof

immigrantsinthesameskillgroup,standardizedbytheinitialsupplyoflaborintheskill

group‐‐i.e.,mit.Ratherthanestimatingthisspecification,however,Borjasestimatesa

versionofequation(8).Inotherwords,despitethefactthathistheoreticalmodel

specificallyrelatesnativeinflowsandoutflowstomit,heactuallyusesΔpit .

b. Estimated Descriptive Correlations

Withthisbackground,weturntoasimplecomparisonofthedescriptive

correlationsthatariseusingeithertheimmigrantinflowmeasuremitortheimmigrantskill

sharepit.ThisexerciseisfacilitatedbythefactthatBorjashashelpfullypostedonline

manyofthedatasetsusedinthecorechaptersofIE,aswellastheprogramsthatareused

tocreatemanyofthetablesinIE6.

Table2showshowtheswitchindefiningthecorrelationofinterestaffectsthesign

andmagnitudeofthedescriptivecorrelationbetweenimmigrantinflowsandnativewages.

Row1ofthetablereproducesthespecificationsformaleworkersreportedinTables4.2

and4.5ofIEcorrespondingtoestimatesofequation(5)above.AsemphasizedbyBorjas,

therearetwosalientfeaturesofthesepartialcorrelations.First,theyareallnegativeand

statisticallysignificant,suggestingthatregardlessofthelevelofaggregationusedtodefine

6 We are also making available the codes and data (modified from IE) used to obtain our results. They can be accessed at the website of the Journal of Economic Literature.

9

labormarkets,agreaterimmigrantpresenceisassociatedwithlowernativewages.

Second,thecorrelationsaremorenegativeathigherlevelsofaggregation,leadingBorjasto

arguethat"...otherfactorsareperhapsdiffusingtheimpactofimmigrationacrosslocal

labormarketsorthattheremaybemeasurementerrorintheobservedimmigrantshare

forsmallergeographicunits."(p.86)

Row2ofTable2showswhathappenswhenthedependentandthekey

independentvariablesareexpressedinfirstdifferences,asinequation(6)above.The

magnitudeofthepartialcorrelationsisreducedbutthegeneralconclusionremainsthat

nativewagesarenegativelyrelatedtoimmigrantshares,withalargernegativecorrelation

athigherlevelsofaggregation.

Row3ofTable2,then,presentsthepartialcorrelationsfromourpreferred

specificationbasedonequation(3)above,whichrelateschangesinnativewagesto

immigrantinflows,expressedasafractionofthesizeoftheskillgroupspecificlaborforce

inthepreviousCensus.Insharpcontrasttotheestimatesofβp inrows1and2,the

estimatesofβm areallrelativelysmallinmagnitudeandexceptatthenationallevel,

positive.Moreover,theestimatesofβm areverysimilarasthelevelofaggregationchanges

frommetropolitanareatostatetoCensusdivision.Thepointestimateofβm atthenational

levelisnegative,butgiventherelativelylargesamplingerrorforthenationalestimateone

couldeasilyconcludethatthepartialcorrelationbetweenimmigrantinflowsandnative

wagesisclosetozeroandinvarianttothelevelofaggregation.

Partoftheexplanationforthedifferencebetweentheestimatesofthetwopartial

correlationsisrevealedinrow4,wherewerelatethechangeinnativewagestothe

componentofthechangeinΔpit thatisattributabletoinflowsoroutflowsofnativeworkers

10

(i.e.,totheterm–pit-10 ×ΔNit/Lit-10).Atthearealevel,changesinnativewagesarenegatively

correlatedwiththiscomponent,presumablybecausenativeworkerstendtomovetoareas

oftheUSwheretheirwagesaregrowing.Atthenationallevel,incontrast,thecorrelation

isimpreciselyestimatedbutinsignificantlydifferentfrom0.

ThecomparisonsacrosstherowsofTable2maybehelpfulfornon‐specialistswho

areawareofthedebatesintheimmigrationliteratureregardingtheimpactofimmigration

onnativewages,andpuzzledbythefactthatsomeanalysts‐‐includingBorjas‐‐believe

thereisastrongprimafaciecaseofanegativeimpact,whileothers‐‐includingus‐‐believe

thereisnot.Asshowninthetable,thestrengthandeventhesignofthebasicdescriptive

correlationsdependentirelyonwhatcorrelationsaredeemedtobeofinterest.Although

westronglybelievethattheelasticitiesofinterestaredefineddirectlybyequation(1)‐‐

leadingustofocusonthepartialcorrelationsinrow3ofTable2‐‐wehavelittlereasonto

expectanyconvergenceofopiniononthisissue.

c. Interpreting the "Descriptive Correlations"

WhiletheestimatesinChapter4ofIEarepresentedas"descriptivecorrelations",it

isimportanttokeepinmindthatthesearepartialregressioncoefficientsobtainedfrom

modelswitharichsetofcontrols.Consider,forexample,theestimatedcorrelationsinthe

fourthcolumnofTable2,whicharebasedonnationaldataformalewagesandimmigrant

inflows(orshares)in40differenteducation/experiencecells.Howshouldoneinterpret

theestimatedpartialcorrelationinrow3,whichis‐0.124?

11

AccordingtothemodellaidoutinChapter3,thechangeinwagesmeasuredat

periodtforworkersinagiveneducation(e)andexperience(x)cellisdeterminedbya

structuralequationoftheform:

extx

etex

text mmw

111log

(9)

whereδtisaperiodeffectthatincorporatestheadjustmentoftheaggregatecapital‐labor

ratioovertherelevantperiod,metistheproportionalincreaseinthenumberofworkersin

educationgroupe,mextistherelativeincreaseinthesupplyofworkersinthespecific

education/experiencegroupexovertherelevantperiod,andσe andσx arethepartial

elasticitiesofsubstitutionbetweeneducationgroupsandexperiencegroups,respectively.

Giventhatthemodelsincolumn4includeeducation‐group‐by‐timefixedeffects,which

willfullyabsorbmet,the‐0.124estimatecanthereforebeinterpretedasanestimateofthe

inverseelasticityofsubstitutionbetweenexperiencegroups.7Indeed,Borjas'structural

estimateofthisinverseelasticity,reportedinrow1ofTable5.1,is‐0.153.Similar

estimatesofthesameparameterarereportedinCardandLemieux(2001),Borjas(2003),

andOttavianoandPeri(2012).Thus,the"descriptivecorrelations"inTable2,andin

Chapter4ofIE,aremuchclosertomodel‐basedparameterestimatesthansimple

correlations.

Inanextendeddiscussiononpages127‐130ofIE,Borjasarguesthatthedescriptive

correlationspresentedinChapter4(andsummarizedinthetoprowofTable2)capturean

averageoftheown‐groupandcross‐groupelasticitiesofwageswithrespecttotheinflows

7 This is really a reduced form estimate from a system in which the first stage relates the overall number of workers in the education/experience group in year t to the associated immigrant inflow. In fact the first stage coefficient is not far from 1.

12

ofimmigrantsinvariousskillcategories.However,thisinterpretationisonlycorrectifthe

partialcorrelationisestimatedinaspecificationwithouteducation‐group‐by‐yeareffects.

Whentheseeffectsareincluded,astheyareinthemodelsusedinChapter4(andinallthe

specificationsreportedinTable2),theyabsorballormostoftherelevantcross‐

complementarityeffectsexertedbychangesinthenumberofworkersinothereducation

groups.Indeed,ifthenestedCESmodelunderlyingequation(9)iscorrect,thesefixed

effectsfullycontrolforallrelevantcross‐complementarities.

Nevertheless,itisinterestingtofollowBorjas’intuitionandaskwhathappenstothe

partialcorrelationbetweenwagesofworkersinspecificskillgroupsandthe

correspondingimmigration‐inducedrelativesupplyshockswhenthemodelisfitwithout

controllingforeducation‐timeeffects.Carryingoutthisexerciseusingallskillgroupsat

thenationallevelyieldsanestimatedpartialcorrelationof0.409(standarderror=0.092).

Theargumentpresentedonpages127‐130suggeststhatthiscanbeinterpretedasan

estimateoftheneteffectofimmigrant‐drivensupplyshocksoccurringthroughouttheskill

distributiononaveragewagesintheeconomy.Iftrue,then,theneteffectofimmigration

hasbeenpositive.Withouteducation‐group‐specifictimeeffectsintheestimatingmodel,

however,thepartialcorrelationbetweenwagesandimmigrantinflowsislikelytopickup

skill‐biasedtechnologicalchangesandotherfactorsthathappentobecorrelatedwith

immigrantsupplyshocks,sowearereluctanttoendorsethisinterpretation.

Tosummarize:the"descriptivecorrelations"estimatedfromanational‐levelmodel

witheducation‐group‐andexperience‐group‐specifictimeeffectsareactuallyinterpretable

asestimatesoftheinversepartialelasticityofsubstitutionbetweennarrowlydefinedskill

cells,andhavelittlebearingonthetotalwageeffectofimmigration.Ifoneconfines

13

attentiontonationalleveldata,asBorjasarguesisappropriate,thenamodelisneededto

simulatetheeffectsofimmigration.Analternativeapproachistofocusoncorrelationsata

lowerlevelofaggregation,likethecityorstate,andusethetrendsinothercitiesorstates

asadata‐drivencounterfactual.Assumingthatcorrelationsfocusonchangesinthenet

suppliesofdifferenttypesoflaborassociatedwithimmigrantinflows,webelievethat

thereisusefulinformationinthearea‐basedcorrelations.Specifically,assumingthatthere

isalocalproductionfunctiongeneratingthelocaldemandforlabor,thetheoretical

frameworkdevelopedinChapter3ofIEcanbeusedtounderstandhowimmigrant‐

inducedsupplyshocksaffectrelativewagesofnativesatthelocallevel.

d. Descriptive Correlations With Native Migration Flows

Asecondsetof"descriptivecorrelations"arepresentedinChapter6ofIE,relating

theinter‐areamigrationflowsofnativesinspecificskillgroupstothecorresponding

immigrantskillshares.Asnotedaboveinthediscussionofequation(8),webelievethese

correlationsareparticularlysusceptibletobiasesarisingfromthefactthatthemeasureof

immigrantpresenceusedbyBorjasismechanicallynegativelycorrelatedwithnetnative

migration.

Table3presentsaseriesofestimatesthatillustratetheissues,followingthesame

formatasTable2.Row1reproducesthespecificationsreportedinTable6.1ofIE.Using

theimmigrantsharepit asameasureofimmigrationpressure,itappearsthatnative

locationdecisionsareextremelysensitivetothepresenceofimmigrants:the‐0.664

estimatefornetnativemigrationacrossmetroareasincolumn1,forexample,suggests

thattheadditionof100newimmigrantsinagivenskillgroupinacityleadstoanet

14

reductionof66inthenumberofnativesinthatskillgroup,arisingfromacombinationof

reducednativein‐migration(alossof39natives)andincreasednativeout‐migration(a

lossof28natives).Theseestimatesimplythatnativemigrationflowsundofullytwo

thirdsofthesupplyeffectcausedbyimmigrantinflowstospecificcities.Theeffecton

statesissmaller,butstilleconomicallylargeandhighlysignificant.

Inrow2ofTable3wepresentspecificationsinwhichthekeyindependentvariable

isexpressedinfirstdifferences.AsinTable2,themagnitudeofthepartialcorrelationsis

reduced,buttheestimatesstillshowlargenegativeeffectsofimmigrantinflowsonnet

nativemigration.

Row3ofTable3presentsestimatesfromourpreferredspecificationwhichdirectly

relatesnativemigrationflowstoimmigrantinflows.Atthemetropolitanarealevelthe

estimatedresponsesarereducedinmagnitudeby85%,andsuggestthatthemigration

responsesofnativesonlyundoabout10%oftheeffectofimmigrantinflows.Atthestate

levelthenetnativemigrationeffectisevensmaller,andstatisticallyinsignificant.

Inrow4werelatethenativemobilityflowstothecomponentofthechangeinΔpit

thatisattributabletoinflowsoroutflowsofnativeworkers(i.e.,totheterm–pit-10 ×ΔNit/Lit-

10).Asexpected,wefindanegativecorrelationwithnativein‐migrationandapositive

correlationwithnativeoutmigration,bothparticularlystrongatthemetropolitanarea

level,thatexplainasignificantshareofthemeasuredmigrationresponsesinthe

specificationsinrows1and2.

Overall,weconcludethatBorjas'useofimmigrantskillsharesasthemeasureof

immigrantimpactleadstoaseriousexaggerationoftheresponsivenessofnatives'location

decisionstothepresenceofimmigrants.Atthecitylevel,ourapproach–whichisdirectly

15

consistentwiththestructuralmodeloutlinedbyBorjasinChapter6–suggeststhatnative

migrationflowsoffsetonlyabout10%oftheeffectofimmigrantinflows.Atthestatelevel,

ourapproachsuggestsanevensmalleroffset.

Again,acomparisonacrossthedifferentrowsofTable3maybeusefultonon‐

specialists,whoareawareofthesharpdifferenceofopinionbetweensomeanalysts–like

Borjas–whobelievethatimmigrationinflowsleadtolargeoffsettingmovementsof

natives,andotheranalysts–likeus–whobelievetheseoffsettingmobilityflowsare

small.The"evidence"dependsentirelyonhowonechoosestomodelimmigrationinflows.

Inourview,thetheoreticallyappropriateandempiricallydefensibleapproachsuggests

thattheoffsettingmobilityflowsofnativesaresmall.Basedonpastexperience,however,

wedonotexpectanyconvergenceofopiniononthenatureoftheappropriateevidence.8

II. Model-Based (Structural) Analysis of the Impacts of Immigration

NowweturntoadiscussionofwhatisarguablythecentralchapterinIE.InChapter

5,Borjaspresentsasetofsimulationresultsthatquantifytheeffectsofimmigrantarrivals

overtheperiodfrom1990to2010onthewagesofvariousnativegroups.Thesetup

followsthetemplateofBorjas'influential2003paperintheQuarterly Journal of Economics.

Aggregateoutputisproducedbya3‐levelnestedfunctionwithconstantreturnstoscale:

);,( tttt LKfQ (10a)

);,...,( 21 tJtttt LLLgL (10b)

);,...,( 21 teKtteteet LLLhL (10c)

8 The argument that native mobility rates should be related to immigrant arrival flows (rather than the contemporaneous fraction of immigrants) is made in Wright, Ellis and Reibel (1997), Card and DiNardo (2000), Card (2001), and Peri and Sparber (2011), but is not acknowledged by Borjas.

16

whereKtrepresentscapitalinyeart,Ltrepresentsaggregatelaborinput; L1t, L2t, ... LJt,are

theaggregateamountsoflaborineachofJeducationclasses;Lext istheamountoflaborin

education/experienceclassex inyeart(fore=1,..Jandx=1...K),λtrepresentsa2‐

dimensionalvectoroftechnologyparameters;θt isaJ‐dimensionalvectorofeducation‐

groupspecifictechnologyparameters,andαt isaJK‐dimensionalvectorofexperience‐

groupspecificparameters.ForhisbaselinesimulationsBorjasassumesfisCobb‐Douglas

(withlabor'sshareequaltos),gisaCESfunctionwithelasticityofsubstitutionparameter

σe,andhisaCESfunctionwithelasticityofsubstitutionparameterσx.

Inthismodelanincreaseinlaborsupply(regardlessofskillmix)hasnolongrun

effectonaveragewagesintheeconomyifthecostofcapitalisheldconstant,whileinthe

shortrunwithfixedcapital,theelasticityofaveragewageswithrespecttoaggregatelabor

supplyis–(1–s),whichBorjassetsto‐0.3.Theskill‐groupspecificimpactsofdifferent

laborinflowsdependonthetwoparametersσeandσx.Givenvaluesofthesetwo

elasticitiesandinformationontheskillsharedistributionsofimmigrantarrivalsitis

possibletosimulatetheeffectsonskill‐groupspecificaveragewages.

Table4summarizesthesimulationresults.ThetoprowshowsBorjas'baselinelong

runsimulatedimpactsofimmigrantinflowsoverthe1990‐2010periodforeachof5

educationgroupsandallnatives.(Thecorrespondingsimulatedimpactsassumingno

adjustmentofcapital–whichwebelievetobeunrealisticfora20yearperiod–areall

shifteddownby3.2%,reflectingthe11%increaseinoveralllaborsupplyBorjasattributes

toimmigrationovertheperiod).Thebaselinesimulationassumesthatσe=5andσx=6.7.

Thesimulatedgainsandlossesfordifferenteducationgroupsaresmallinmagnitude,with

17

thelargestnegativeeffect(‐3.1%)forhighschooldropouts,reflectingtherelativelylarge

inflowofpoorlyeducatedimmigrantsoverthepastseveraldecades.

Oneconcernaboutthesebaselinesimulationsisthatthepresumedstructureof

substitutionbetweendifferenteducationgroupsisincorrect.AsnotedinCard(2005,

2009)andOttavianoandPeri(2012),anddiscussedinsomedetailinChapter5ofIE,akey

issueisthedegreeofsubstitutabilitybetweendropoutsandhighschoolgraduates.Ifthese

twogroupsareperfectsubstitutes‐‐aswehavearguedinourearlierwork‐‐thenthe

impactofthelargeinflowsofimmigrantswithlessthanahighschooleducationisdiffused

acrossamuchlargersegmentofthenativeworkforce.Asshowninrow2ofTable4,with

thisassumptionthesimulatedimpactsofimmigrationforthebottomtwoeducationgroups

arenowverysmall,whiletheeffectsfortheothereducationgroupsareunchanged.Borjas

presentsavarietyofnewevidenceontheissueandultimatelyconcludesthat

"... the available evidence on the elasticity of substitution between high school dropouts

and high school graduates is not robust to assumptions made about the time path of

unobserved shocks to relative demand.... The sensitivity of the results suggests that the

nested CES framework does not provide a particularly useful approach for analyzing the

substitutability of labor between these two skill groups" (page124).

Asimilarissueariseswithregardtothedegreeofsubstitutabilitybetween

immigrantsandnativeswiththesameeducationandexperience.Manyanalystshave

notedthatimmigrantsandnativeswiththesameobservedcharacteristicsaretreated

differentlybythelabormarket.9Lewis(2013b)arguesthatanimportantsourceof

9 See e.g., Dustmann, Frattini and Preston (2015). In fact, the difference in age profiles of earnings for immigrants and natives has been a major concern in the immigration literature, and is taken up in Chapter 2 of IE. Friedberg (2000) showed that immigrants typically receive no return to their pre-migration experience.

18

imperfectsubstitutabilityislanguageability.10PeriandSparber(2009)documentthat

immigrantstendtospecializeinoccupationswithlowerintensityoflanguageand

communicationskills.Amongyoungerandlesseducatedimmigrantsanotherfactorislegal

status:manyoftheseimmigrantsareundocumented,andarepushedintocertaintypesof

jobswhereimmigrationlawscanbeeasilyevaded.

OttavianoandPeri(2012)andManacorda,ManningandWadsworth(2012)

introducedtheideaofusinga4‐levelnestedproductionfunctiontoincorporateimperfect

substitutionbetweenimmigrantsandnatives,andshowedthatevenasmalldegreeof

imperfectsubstitutioncanaltertheconclusionsaboutthewageimpactsofimmigration.As

showninrow3ofTable4,assumingthattheelasticityofsubstitutionbetweenimmigrants

andnatives(σNM)is20raisestheaveragewageimpactonnativestoasmallpositive

number,andreducesthesizeofthesimulatedlossesfornativedropouts.Assumingboth

perfectsubstitutionbetweendropoutsandhighschoolgraduates,andimperfect

substitutionbetweenimmigrantsandnativesyieldsthesimulationresultsinrow4of

Table4.Inthissimulationallnativegroupsexceptthosewithadvanceddegreesarefound

tobenefitfromrecentimmigrantinflows.

Aswiththeelasticityofsubstitutionbetweendropoutsandhighschoolgraduates,

Borjaspresentsavarietyofevidenceandultimatelyconcludesthatthelikelymagnitudeof

1/σNMissosmallasto...”notbeanimportantfactorinanassessmentofthelabormarket

impactofimmigrationintheUnitedStates.”(p.118).

Wearelessconvincedbyhisanalysis,asitincludesalargesetofnon‐modelbased

fixedeffectsthatdrasticallyreducetheidentifyingvariation.Infact,estimatesofallthe 10 Ferrar, Green and Riddell (2006) show that immigrants in Canada have lower literacy skills than otherwise similar natives, and argue that this accounts for some of the immigrant wage penalty.

19

criticalparametersintheaggregateproductionfunction(notjust1/σNM)arehighly

sensitivetoassumptionsaboutunobservedrelativeproductivitytrends.AsBorjas

documentsinTable5.1,estimatesof1/σevarysubstantially,dependingonhowonemodels

thetrendsintherelativefactorproductivityterms(λt)intheupperlevelnest.Estimatesof

1/σxaresimilarlysensitive.Forexample,addingexperience‐group‐by‐yeartrendsto

equation5.5(thebasicestimatingmodelfor1/σx)alongthelinesoftherobustnesschecks

proposedabovefor1/σNM,causestheestimateof1/σxtofallfromthebaselinevalueof

0.15(withastandarderrorof0.06)to0.07(withastandarderrorof0.05).Overallwe

believethatthebulkoftheevidencepointstowardasmall,butnon‐negligibledegreeof

imperfectcompetitionbetweennativeandimmigrantworkers.

IntheendBorjasconcludesthat...“thenestedCESstructuralapproachseemsfar

toosensitivetotheimpositionofunverifiable(butnecessary)assumptionstobeofmuch

useingivingarobustandconvincinganswer”abouttheimpactsofimmigrantinflows(p.

127).WhileweagreethattheprecisenumberscomingfromtheCESapproachare

somewhatvariable,wetakeadifferentlessonfromtheresultsinTable4.Tous,itseems

clearthatthesimulatedeffectsofimmigrantarrivalsonnativewagesarequitesmall,

underavarietyofspecificassumptionsusedinthesimulation.

III. Welfare and Productivity Effects of Immigration

Chapter7ofIEmovesfromtheanalysisofnativewageoutcomestotheoverall

economicbenefitsofimmigration.Themodel,however,isdecidedly"oldschool"(Barry

andSolingo,1966),andsimplycalculatesthesurplustrianglesassociatedwithanoutward

shiftinsupplyofvariousskillgroups,assumingverticalsupplycurves.Underthe

20

assumptionsofconstantreturnstoscale,fixedtechnology,andelasticcapitalsupplies,the

calculatedsurplusisnecessarilysmall,particularlyifimmigrantsarenottoodifferentfrom

natives.AsBorjasconcludes..."itismathematicallyimpossibletomanipulatethecanonical

modelofthecompetitivelabormarketsoastoyieldalargenetgainfromimmigrationto

theUnitedStates"(p.151).

Thisiscertainlytrue.Therealquestioniswhetheronewantstotakeseriouslyany

oftheideasinmoderngrowththeory,whichallowforeffectsofhumancapitalexternalities

(e.g.,Romer,1990;Moretti,2004a,2004b),skillvariety(Alesinaetal.,2013),task

specialization(GrossmanandRossi‐Hansberg,2011),marketintegration(Rivera‐Batizand

Romer,1992),andpotentialgainsfromrisingnumbersofscientistsandengineers(Jones,

2002).Thesemodelsallowforpotentialincreasingreturnstoscaleand/orendogenous

technologicalchange‐‐factorsthatarguablydominatethesecondordersurplus

calculationspresentedinChapter7,andhavebeenlinkedinrecentworktoimmigration

flows(e.g.,KerrandLincoln2010,Lewis2012a,Peri2012,Perietal.(2014),Ottavianoet

al.2013).

AttheendofChapter7Borjasdiscussesthewelfarecostsofimmigrationwhen

therearedecreasingreturnstoscale,buildingonamodelbyHamiltonandWhalley

(1984).Obviously,anymodelwithdecreasingreturnstoscalewillleadtonegative

spilloversfrompopulationgrowth,asMalthusfamouslynoted.Inlightoflastfewdecades

ofresearchoneconomicgrowth,however,itseemstousthattheMalthusianintuitionis

wrong,andthattheonlyreasononewouldentertainsuchamodelisforpurelyrhetorical

purposes.

21

FinallyChapter8ofIEreviewssomeinterestingcasestudiesofhighskilled

immigration,focusingonimpactsonproductivityininnovation(measuredbypatents)and

academia(measuredbythenumbersofpaperspublishedbymathematicians).Inthecase

ofpatents,foreignskilledworkersseemtobehighlyproductive(HuntandGauthier

Loiselle2010),withnoevidenceofanegativespilloverontheoutputofnatives(Kerrand

Lincoln2010;summarizedinTable8.2ofIE).Inthecaseofacademicmathematicians,

evidencefromBorjasandDoran(2012),summarizedonpages183‐190ofIE,suggests

immigrantarrivalsharmtheproductivityofnatives.Theyfindthatinflowsof

mathematiciansfollowingthecollapseoftheSovietUnionledtoareductioninthe

publicationsofUSmathematicianswhohadspecializedinareasinwhichtheRussian

mathematicianswereparticularlystrong,andadisplacementofUSacademicstolower‐

qualityacademicjobsandnon‐academicpositions.Overall,itappearsthattheproduction

ofscholarlypapersinmathematicsismuchclosertoa"zerosum"gamethanthe

productionofpatents,andthatmathematicianshavearelativelyhardtimeadjustingthe

focusoftheirresearchinmidcareer.Itishardtoarguewitheitherconclusion.

Whethertheimpactsofimmigrationonacademicmathematicsareusefulfor

thinkingaboutthegeneraleconomiceffectsofhighskilledimmigrationislessclear.The

numberofpositionsintopacademicinstitutionsandthenumberofpapersintopacademic

journalsarerelativelyrigid,sothesearenaturalplacestolookforstrongdisplacement

effects.Wedon'tthinka"fixedslots"paradigmislikelytobeasapplicableforthebroader

labormarket.Indeed,Peri,ShihandSparber(2014)findastrongpositivecorrelation

betweeninflowsofforeignSTEM(science,technology,engineeringandmath)workersand

thewagesofcollege‐educatednativesacrossUScities.

22

IV. Conclusions

GeorgeBoras'newbook,Immigration Economics,providesaconciseoverviewof

manyoftheimportantissuessurroundingimmigrationandlabormarkets.Thebookis

writtenasagraduateleveltextbook,andsummarizesandupdatesmanyofBorjas'

importantcontributionstothefieldoverthepast30years.Aparticularstrengthofthe

bookisthecloseattentiontointegratingsimpletheoreticalmodelswithsophisticated

econometricanalysis.Thechaptersonmodelinglabordemandandusingthemodelsto

evaluatetheeffectsofimmigrationonnativeoutcomesareclearandcomprehensive,and

willsurelyfindtheirwaytograduatereadinglists.

IncontrasttoBorjas'mostrecent(1999)bookHeaven’s Door: Immigration Policy

and the American Economy,Immigration Economicsismorenarrowlyfocusedoneconomic

analysis,withalmostnomentionofpolicyissues.Nevertheless,inalmosteverychapter

thebookmaintainsauniformlydismalviewaboutimmigration.Thisisparticularlytruein

thecorechaptersonimmigrantlabormarketimpacts,whichfocusondescriptive

correlations(Chapters4and6),simulations(Chapter5),andcasestudies(Chapter8)that

emphasizethecostsofimmigrationtonativeworkers.Aswehaveemphasized,Borjas'

choiceofwhichdescriptivecorrelationtopresent,whichparametervaluestouseinthe

simulations,andwhichcasestudiestoemphasizeallendupreinforcingthisdismalview.

Thus,althoughthebookisnon‐political,ithasaclearmessage:immigrationiscostlyto

manymembersofthehostcountry.

AfterreadingImmigration Economics,onebeginstowonderwhycountriesever

decidetohaveanyimmigrants,andwhymanycountriescontinuetoallowrelativelylarge

23

inflowsofimmigrants.Areimmigrationpoliciesmanipulatedbyanelitewhobenefitfrom

thesepoliciesattheexpenseofothers?Oristhebalanceofbenefitsversuscosts‐‐evenfor

nativeworkerswhoaremostdirectlyincompetitionwithimmigrants‐‐morepositivethan

onemightbeledtobelievefromreadingBorjas'latestbook?We,andmanyother

economists,comedownonthelatterside.Immigration Economics presentshalfthestory

abouttheeconomicsofimmigration.Theotherhalfofthestory,althoughaprominent

featureofmuchoftheworkdonebyothereconomistsduringthepastthreedecades,has

noplaceinthisbook.

24

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Romer,PaulM.(1990)."EndogenousTechnologicalChange."Journal of Political Economy98(5):S71‐S102.SteinhardMaxF.(2011)“TheWageImpactofImmigrationinGermany:NewEvidenceforSkillGroupsandOccupations.”BE Journal of Economics Analysis and Policy11(2).

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Table 1: Summary of Chapter Content: Immigration Economics.

Chapter and Related Articles Main Questions Answers

b. How large are implicit costs of migration? b. Very large.

a. At arrival to the U.S. how much less do immigrant men earn than natives? Is the gap bigger for recent cohorts?

a. New immigrants earn less than natives. Gap is bigger for recent cohorts, mainly because of rising returns to education.

b. In their first 10 years in the U.S. how much do average earnings of immigrant men rise? Is the rate of increase smaller for recent cohorts?

b. Immigrant earnings rise relatively slowly. The rate of increase is particularly low for more recent arrival cohorts.

a. What is the partial correlation between wages and the share of immigrants in a group?

a. Uniformly negative, but varying in magnitude.

b. How does this correlation vary with the level of aggregation: cities / states /divisions or national level?

b. More negative at higher levels of aggregation.

a. What are the simulated effects of immigrant arrivals from 1990 to 2010 on the wages of different education groups from a baseline model?

a. Largest effect on high school dropouts –6% assuming no capital accumulation, –3% assuming fixed return to capital.

b. Should the baseline model account for imperfect substitutability between immigrants and natives with similar skills?

b. Possibly

c. Should the baseline model allow for perfect substitutability between high school graduates and dropouts?

c. Possibly

a. Do men who immigrate to the U.S. have above- or below- average potential earnings in the U.S. relative to others from the same source country?

a. US immigrants are typically negatively selected -- more likely to come from the bottom than the top of the distribution.

Chapter 1: The Selection of Immigrants Borjas (1987, 2008)

Chapter 2: Economic Assimilation Borjas (1985, 1995a)

Chapter 5: The Wage Effects of Immigration: Structural Estimates Borjas (2003)

Note: table continues.

Chapter 3: Immigration and the Wage Structure: Theory Borjas (2003)

How does immigration affect wages in the short run (with fixed capital) and in the long run (with a fixed return to capital)?

In the short run, immigration lowers wages. In the long run, it may or may not affect average wages, but it lowers the relative wage of groups with higher inflow rates.

Chapter 4: The Wage Effects of Immigration: Descriptive Evidence Borjas (2003)

Table 1: Summary of Chapter Content: Immigration Economic, continued

Chapter and Related Articles Main Questions Answers

a. Do natives in a given age/education group move away when there is a higher share if immigrants in their group in the local market?

a. Yes. Native mobility rates across cities and states are relatively sensitive to immigrant shares.

b. Do firm investments vary with the local immigration rate of low skilled workers?

b. Yes. Firm investment choices are relatively sensitive to the shares of low-skilled immigrants in their local market.

Chapter 7: The Economic Benefits of Immigration Borjas (1995b)

What are the net effects of immigration on US income? Small positive gain (assuming fixed return to capital).

Chapter 8: High Skilled Immigration Borjas (2009); Borjas and Dorn (2012)

Are there positive spillover effects from high skilled immigration that offset the basic negative impacts?

High skilled immigrants lower wages and opportunities for high skilled natives. No evidence of positive spillovers.

Chapter 8: The Second Generation Borjas (1992, 1993)

a. Do US-born male children of immigrants earn more than 3rd and higher generation natives? Is the gap smaller for recent cohorts?

a. US born children of immigrants earn more than other natives, but the gap is smaller today than in the past.

b. How strong is the intergenerational correlation between immigrant fathers and their US-born sons?

b. The intergenerational correlation is high (at least 0.5). This is due in part to ethnic capital, which limits intergenerational progress for many subgroups.

Chapter 6: Labor Market Adjustments to Immigration Borjas, Freeman, Katz (1996); Borjas (2006)

Source: authors' summary of Immigration Economics.

Metropolitan Area State Census Division National

1. Borjas' specification: immigrant -0.058 -0.186 -0.237 -0.529 share in levels (p it ) (0.018) (0.029) (0.048) (0.102) (Table 4.2, row 1 and Table 4.5, col. 1)

2. Change in immigrant share (∆ p it ) -0.029 -0.058 -0.106 -0.237(0.011) (0.024) (0.043) (0.118)

3. Immigrant inflow (m it ) 0.036 0.049 0.022 -0.124(0.010) (0.019) (0.032) (0.132)

4. Contribution of native inflows to -0.102 -0.123 -0.135 0.078 change in immigrant share (0.024) (0.033) (0.047) (0.114) (–p it-10 ∆N it /L it-10 )

Coefficients in Row 1 are obtained by regressing the logarithm of native wages on the immigrant share of labor in the skill group controlling for skill-time, area-time and area-skill fixed effects. Coefficients in row 2 are obtained by regressing the change in the logarithm of native wages on the change of the immigrant share in the skill group and including skill-time and area-time fixed effects. Coefficients in row 3 are obtained by regressing the change in the logarithm of native wages on the inflow of immigrants in the skill group over the past decade (m it ) including skill-time and area-time fixed effects. Coefficients in row 4 are obtained regressing the change in the logarithm of native wages on the contribution of native inflows to the change in immigrants share and including skill-time and area-time fixed effects.

Table 2: Longitudinal Spatial Correlations Between Immigration and Native Male Wages: Reproduction and Extension of Tables 4.2 and 4.5 in Immigration Economics

Definition of Regional Labor Market

Specification and Explanatory Variable

Note: See notes to IE, Tables 4.2 and 4.5. Standard errors, clustered by skill group/region level (columns 1-3) and by skill group (column 4), in parentheses. Metro area models use data on male workers in 5 education groups and 8 experience groups from 1980, 1990, 2000 Census and 2009-2011 American Community Survey (42,770 observations). State, division, and national models add data from 1960 and 1970 Census (12,215 observations at the state level, 2,160 at the division level, 240 at the national level).

Net Native Migration

Native In-migration

Native Outmigration

Net Native Migration

Native In-migration

Native Outmigration

1. Borjas' specification: immigrant -0.664 -0.385 0.278 -0.323 -0.159 0.164 share in levels (p it ) (0.223) (0.198) (0.070) (0.099) (0.082) (0.049) (Table 6.1)2. Change in immigrant share (∆ p it ) -0.442 -0.248 0.193 -0.179 -0.019 0.160

(0.073) (0.065) (0.025) (0.062) (0.057) (0.039)

3. Immigrant inflow (m it ) -0.100 -0.048 0.051 -0.071 0.012 0.084(0.035) (0.030) (0.012) (0.043) (0.037) (0.021)

4. Contribution of native inflows to -0.210 -0.084 0.125 -0.071 -0.027 0.044 change in immigrant share (0.060) (0.047) (0.026) (0.090) (0.089) (0.043) (–p it-10 ∆N it /L it-10 )

Note: See notes to IE, Table 6.1. Standard errors, clustered by skill group/region level, in parentheses. Metro area models use data on male workers in 5 education groups and 8 experience groups from 1990 and 2000 Censuses and 2009-2011 American Community Survey and have 21,239 observations. State models add data from 1970 and 1980 Censuses and have 8,157 observations. Coefficients in row 1 are obtained by regressing the dependent variable listed at the top of the column on the immigrant share of labor in the skill group controlling for skill-time, area-time and area-skill fixed effects. Coefficients in row 2 are obtained by regressing the dependent variable listed at the top of the column on the change in the immigrant share in the skill group and including skill-time and area-time fixed effects. Coefficients in row 3 are obtained by regressing the dependent variable listed at the top of the column on the inflow of immigrants in the skill group over the past decade (mit), including skill-time and area-time fixed effects. Coefficients in row 4 are obtained by regressing the dependent variable listed at the top of the column on the contribution of native inflows to the change in immigrant share, including skill-time and area-time fixed effects.

Table 3: Longitudinal Spatial Correlations Between Immigration and Native Migration Flows (Based on IE, Table 6.1)

Native Flows Between Metropolitan Areas Native Flows Between States

Specification and Explanatory Variable

Table 4: Simulated Wage Impacts of U.S. Immigration 1990-2010 on Native Subgroups, Allowing Capital Adjustment

High School High School Some Four Years Post AllDropouts Graduates College College Graduate Natives

1. Baseline -3.1 0.4 0.9 -0.1 -0.9 0.0 Table 5.4, row 4

2. Assume Perfect Substitition between Dropouts -0.2 -0.2 0.9 -0.1 -0.9 0.0 and HS Graduates (σHS=0) Table 5.6, row 8

3. Assume Imperfect Substitition between -1.7 0.9 1.2 0.5 -0.1 0.6 Immigrants and Natives (σNM=20) Table 5.4, row 1

4. Assume Perfect Substitition between Dropouts 1.1 0.2 1.2 0.5 -0.1 0.5 and HS Graduates and Imperfect Substitution between Natives and Immigrants (σHS=0, σNM=20) Table 5.6, row 4

Notes: all estimated impacts taken from estimates reported in IE, chapter 5.

Education Subgroup: