Revisiting the Labor Demand Curve: The Wage Effects of Immigration and Women's Entry into the US Labor Force, 1960-2010

40 Pages Posted: 7 Jan 2015

See all articles by Alan de Brauw

Alan de Brauw

International Food Policy Research Institute (IFPRI)

Joseph Russell

World Bank - International Finance Corporation (IFC)

Date Written: December 31, 2014

Abstract

The debate over the wage effects of immigration for native workers is an old one. One side of the debate claims that immigration has little if any negative impact on wages among natives, whereas others suggest that immigration has large, negative effects on native wages. On the latter side of the debate, many point to the work of Borjas (2003), who takes a national view of the US economy and estimates a wage elasticity of -0.4 with respect to immigration. In this paper, we replicate and update Borjas with the 2010 US census data, and use the method to study an even larger, concurrent labor supply shock, namely the entry of women into the labor force. We both find a much lower wage elasticity than Borjas to immigration (-0.2) and estimate a positive, statistically significant relationship between men’s wages and women’s entry into education-experience cells when wages are annualized. We take this evidence to suggest that the Borjas model is misspecified as it inadequately specifies substitution between immigrants and natives, and inadequately controls for structural change in the US economy.

Keywords: immigration, labor force, women, United States

Suggested Citation

de Brauw, Alan and Russell, Joseph, Revisiting the Labor Demand Curve: The Wage Effects of Immigration and Women's Entry into the US Labor Force, 1960-2010 (December 31, 2014). IFPRI Discussion Paper 01402. Available at SSRN: https://ssrn.com/abstract=2545483

Alan De Brauw (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Joseph Russell

World Bank - International Finance Corporation (IFC) ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

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