Substitution between Immigrants, Natives, and Skill Groups

25 Pages Posted: 30 Sep 2011 Last revised: 19 Mar 2023

See all articles by George J. Borjas

George J. Borjas

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Jeffrey Grogger

University of Chicago - Harris School of Public Policy; National Bureau of Economic Research (NBER)

Gordon H. Hanson

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

Date Written: September 2011

Abstract

The wage impact of immigration depends crucially on the elasticity of substitution between similarly skilled immigrants and natives and the elasticity of substitution between high school dropouts and graduates. This paper revisits the estimation of these elasticities. The U.S. data indicate that equally skilled immigrants and natives are perfect substitutes. The value of the second elasticity depends on how one controls for changes in demand that have differentially affected high school dropouts and graduates. The groups are imperfect substitutes under standard trend assumptions, but even slight deviations from these assumptions can lead to an outright rejection of the CES framework.

Suggested Citation

Borjas, George J. and Grogger, Jeffrey T. and Hanson, Gordon H., Substitution between Immigrants, Natives, and Skill Groups (September 2011). NBER Working Paper No. w17461, Available at SSRN: https://ssrn.com/abstract=1935787

George J. Borjas (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Jeffrey T. Grogger

University of Chicago - Harris School of Public Policy ( email )

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National Bureau of Economic Research (NBER)

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Gordon H. Hanson

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

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United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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United States

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