The Short-Run Impacts of Immigration on Native Workers: A Sectoral Approach

December 6, 2018

Dec6.jpeg Ag economics graduate student Zach Rutledge explored the impacts of immigration on wages and employment in six sectors in 150 MSAs including construction, and found negative impacts using ACS data He found a positive correlation between more immigration and better economic variables, but analysis of regional and time variation found a negative  relationship between the foreign-born share of the labor force and GDP, per-capita GDP, employment, native employment, and per-capita income. Most of these negative effects dissipate in the longer-term.


This paper provides empirical estimates of the short-run impacts of immigration on the employment opportunities of US-bornworkers based on a novel sectoral approach. We focus on six economic sectors with low skill requirements and high shares of immigrant workers. Our inference is based on panel data at the metropolitan area-year level of aggregation. We instrument for the sectoral share of immigrants using the share of immigrants in all other sectors of the economy. Our strategy yields conservative estimates of the effects of immigration on native labor outcomes because (i)movement of capital and native labor across metropolitan areas reduces the extent to which intercity comparisons can account for shocks to native employment conditions, and (ii) our instrument for the immigrant share likely remains correlated with sectoral native labor demand shocks, albeit less so than the sectoral immigrant share itself. We find evidence of negative short-run effects of immigration on native earnings in the construction, food service, and personal service sectors. Upper bounds on the annual earnings impact of a 10 percentage point increase in the share of immigrant workers range from -2.9% to -6.6%. Earnings impact estimates in other sectors are generally negative but not always statistically significant. Effects on the native employment rate are negative and significant across all six sectors.

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