10/25/ million in

Transcription

1 2.5 million in

2 58% Male 2

3 Compiled by Peter F. Orazem based on BLS data 3

4 Problem Set 1: Costs and benefits of the presence of illegal workers in the U.S 1. Hypotheses 2. Key dependent variable(s) 3. Key independent variable(s) 4. Method used to test each hypothesis 5. Ideal data: unit of observation, time frame, sample: cross section/time series Hocheol Jeon: Hypothesis Immigrant workers face wage discrimination that varies by sector and worker attributes and that is independent of the effect of the fraction of illegal workers in the labor market Subscript N refers to nationals Subscript I refers to immigrants 4

5 Dave Jones: Illegal immigrants make less money after controlling for other factors. Firms that obey the law and hire only legal residents will have a profit disadvantage Oaxacca Decomposition ln(w M )= β M X M + e M for males ln(w F )= β F X F + e F for females ln(w M ) ln(w F ) = β M (X M -X F ) + X F (β M - β F ) + (e M -e F ) Explained Unexplained Error has zero avg Sample: Linked employer employee data set Laura Hildreth: Hypothesis Illegal workers are perfect substitutes for domestic workers. If they are not, estimate the actual elasticity of substitution Test 5

6 Mohammad M. Hoque: Illegal immigrants will lower the cost of production in the restaurant industry. Test is food prices respond negatively to the fraction of illegal workers in the local economy. Test using data on the ten most popular restaurants in each of ten cities with high concentrations of illegal immigrants average cost Proportion of immigrants in city i at time t Matt Clancy Low skill domestic workers have wages that are inflexible downward because of the minimum wage. Illegal workers have no minimum wage protection, and so their wages can fall below the minimum. Firms can exploit illegal workers a la Becker Dependent variables Domestic Low skill unemployment rates Wages for illegal workers Employed illegal labor Key independent variable: Immigrant share of the population Rainfall by state in Mexico Unit of observation: city 6

7 Daren Breid Workers displaced by illegal laborers will invest more in college Focus on markets with high immigrant density as determined by industry, location, city size, and ethnic mix. Examine how immigrant density affect enrollment at local l2 year and 4 year colleges. Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Production and Labor in Mexico 7

8 Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Production and Labor in the United States Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Equilibrium More migration from Mexico to the U.S. when Bigger is U.S. GDP relative to Mexico ; Bigger Mexican labor force 8

9 More migration from Mexico to the U.S. when Bigger Mexican supply of skill h Higher U.S. to Mexican terms of trade Lower U.S. cost of living Lower migration cost Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December):

10 Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December):

11 Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December): Chicago, Dallas LA, San Diego?!! Gordon Hanson Illegal Migration from Mexico to the United States. Journal of Economic Literature 44 (December):

12 Are Mexican immigrants negatively selected? 12

13 Observed density of wages in Mexico Observed density of wages of Mexicans in the United States Counterfactual density of wages of Mexicans in the U.S. if facing the Mexican wage density DiNardo, Fortin, Lemiuex, Econometrica, 1996 Reweighting Mexican distribution by the relative importance of each education/experience/gender cell in the United States P(i = US) = X, estimated over sample of both US and MX residents 13

14 Is there negative selection of migrants from Mexico to the U.S. in terms of observable skills If true, larger mass of at lower part of the wage distribution so that M 1 0 at low wages and M 1 0 at high wages In fact, M 1 0 in the middle of the distribution M 1 In fact, M 1 0 in the middle of the distribution 14

15 Selection on observables: Who migrates? Base Wage in country i Return to schooling in country i Years of schooling Earnings for Mexicans in Mexico Earnings for Legal Mexican Migrants in the U.S. Earnings for Illegal Mexican Migrants in the U.S. Assume ; time equivalent cost of migrating full opportunity cost of migrating Selection on observables: Who migrates? incentive to migrate is given by 15

16 Selection on observables: Who migrates? Inserting terms for wages Selection on observables: Who migrates? The most schooled Mexicans will not migrate Most educated more apt to migrate legally than illegally Schooling of immigrants decreases in Cost of immigration Mexican base wage vs U.S. Returns to schooling in Mexico vs U.S. 16

17 Selection on observables: What about the least skilled? Suppose migrants need to borrow with collateral to finance move Required collateral Available wealth for migrants Minimum schooling of migrants Selection on observables: What about the least skilled? Minimum schooling level rises when Moving costs are large Fixed assets ρ are small Returns to schooling are small Collateral requirements are large relative to cost 17

18 Migration Probability Effect of immigration costs on migrant skills High C i Low C i 0 S min S max Years of Schooling 18