Journal Article

The Effect of Immigration along the Distribution of Wages

Christian Dustmann, Tommaso Frattini and Ian P. Preston

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 80, issue 1, pages 145-173
Published in print January 2013 | ISSN: 0034-6527
Published online April 2012 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1093/restud/rds019
The Effect of Immigration along the Distribution of Wages

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  • Demand and Supply of Labour
  • Wages, Compensation, and Labour Costs
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This paper analyses the effect immigration has on the wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of native wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find a pattern of effects whereby immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution. This pattern mirrors the evidence on the location of immigrants in the wage distribution. We suggest that possible explanations for the overall slightly positive effect on native wages, besides standard immigration surplus arguments, could involve deviations of immigrant remuneration from contribution to production either because of initial mismatch or immigrant downgrading.

Keywords: Immigration; Impact; Wage distribution; J21; J31; J61

Journal Article.  13542 words.  Illustrated.

Subjects: Demand and Supply of Labour ; Wages, Compensation, and Labour Costs ; Mobility, Unemployment, and Vacancies

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