Labor Market Competition and the Assimilation of Immigrants

55 Pages Posted: 13 Aug 2021

See all articles by Christoph Albert

Christoph Albert

Centre for Monetary and Financial Studies (CEMFI)

Albrecht Glitz

Universitat Pompeu Fabra; Barcelona School of Economics; IPEG

Joan Llull

Autonomous University of Barcelona - MOVE (Markets, Organizations and Votes in Economics); Autonomous University of Barcelona; Barcelona Graduate School of Economics (Barcelona GSE)

Multiple version iconThere are 3 versions of this paper

Date Written: 2021

Abstract

In this paper, we show that the wage assimilation of immigrants is the result of the intricate interplay between individual skill accumulation and dynamic equilibrium effects in the labor market. When immigrants and natives are imperfect substitutes, increasing immigrant inflows widen the wage gap between them. Using a simple production function framework, we show that this labor market competition channel can explain about one quarter of the large increase in the average immigrant-native wage gap in the United States between the 1960s and 1990s arrival cohorts. Once competition effects and compositional changes in education and region of origin are accounted for, we find that the unobservable skills of newly arriving immigrants increased over time rather than decreased as traditionally argued in the literature. We corroborate this finding by documenting closely matching patterns for immigrants’ English language proficiency.

JEL Classification: J210, J220, J310, J610

Suggested Citation

Albert, Christoph and Glitz, Albrecht and Llull, Joan, Labor Market Competition and the Assimilation of Immigrants (2021). CESifo Working Paper No. 9231, Available at SSRN: https://ssrn.com/abstract=3904533 or http://dx.doi.org/10.2139/ssrn.3904533

Christoph Albert (Contact Author)

Centre for Monetary and Financial Studies (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain

Albrecht Glitz

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Barcelona School of Economics ( email )

Carrer de Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

IPEG ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Joan Llull

Autonomous University of Barcelona - MOVE (Markets, Organizations and Votes in Economics) ( email )

Campus de Bellaterra-UAB Edifici B (s/n)
EDIFICI B
Cerdanyola del Vallès
, Barcelona 08193
Spain

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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