Abstract of the Ph.D. Dissertation:

This dissertation analyzes the effect of unskilled immigration on native wages within a trade theory framework in which results are driven by full-employment and zero-profit conditions.  As a group, natives benefit more, the larger the immigrant impact on factor prices.  Within this multi-good setting conventional notions of substitutability are not useful in explaining the relation between immigration and native wages.

I construct a model in which unskilled workers become skilled at a cost that varies across individuals.  The number becoming skilled depends on the relative wage, itself determined in this general equilibrium setting simultaneously with output prices.  Thus, the resulting supplies of skilled and unskilled workers are endogenous.  Immigration which depresses the unskilled wage, (by depressing price of an unskilled-labor intensive, non-traded good) increases the proportion of native workers becoming skilled.  Unskilled immigrants can not become skilled, and for this reason differ from unskilled natives.  Natives skilled both before and after immigration, benefit; natives unskilled both before and after immigration, lose; and the net impact on natives who become skilled depends on their individual cost of skill acquisition.

U.S. Census PUMS data from 1980 and 1990 are used to construct immigrant intensity measures based on proportion of workers who are recent unskilled immigrants within cities, city/industry pairs, and city/occupation pairs.  Results generally support the predictions of the model.  Higher immigrant intensity within city, and city/industry pair correspond to a higher skilled wage premium.  Wages of native men in more immigrant intensive cities are higher, with this positive relationship less pronounced for natives in the same city/industry pairs, and especially the same city/occupation pairs as unskilled immigrants.  An analysis focusing exclusively on the apparel industry yields similar results.

This dissertation suggests that skilled natives benefit from the factor price changes induced by unskilled immigration.  Rather than restricting unskilled immigration, government policy could focus on helping natives become skilled so that they benefit from such an influx.

JEL Classification Codes:

F-22  (International Factor Movements  -- International Migration)
J-61  (Mobility, Unemployment and Vacancies -- Immigrant Workers)
L-67  (Industry Studies: Manufacturing -- Clothing)

Key Words:
  Immigration
  Heckscher-Ohlin
  Complements
  PUMS (public use micro-sample data from the U.S. Population Census)

Table of Contents

1. Introduction

2. Previous Literature and the Theoretical Setting
  2.1 Background
  2.2 Labor Theory Based Literature
  2.3 Trade Theory Based Approach

3. Substitutability of Immigrants and Natives
  3.1 Definitions of Substitutability
  3.2 Notions of Substitutability in the Trade Theory Literature
  3.3 Factor Accumulation and Prices in a Setting With Multiple Goods
  3.4 Alternative Interpretations of an Empirical Regularity

4. General Equilibrium Model with Endogenous Factor Accumulation
  4.1 Background - Mobility and Factor Markets
  4.2 A Model with Endogenous Factor Adjustment
  4.3 Impact of Unskilled Immigration within the Model
  4.4 Theoretical Predictions of the Model

5. Unskilled Immigrant Intensity and Native Wages
  5.1 Empirical Predictions
  5.2 Factors Complicating the Analysis
  5.3 The Data - 1980 and 1990 PUMS Extraction for 41 Metro Areas
  5.4 Variation in Immigrant Intensity across Industries, Occupations & MSA's
  5.5 Individual Wage Regressions for Native Males
  5.6 Regression Results
  5.7 Preferred Estimates and Summary of Regression Results

6. Immigrants and the U.S. Apparel Industry
  6.1 Data Summary - Employment and Wages
  6.2 Changes in Employment and Wages by Native Cohorts
  6.3 Individual Wage Regressions
  6.4 Preferred Estimates and Interpretation

7. Summary, Conclusions and Policy Implications

Appendix 1 - Data Used in Chapters 5 and 6
Appendix 2 - Taxonomy of Reasons for Increased Wage Inequality
Appendix 3 - Numerical Example of Cones of Diversification

References

Committee Members:
  Edward E. Leamer, Chair
  Kenneth Sokoloff
  Wei-Yin Hu
 Christopher Erickson