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The Labor Market Impact of Immigration: Job Creation versus Job Competition

  • Christoph Albert
American Economic Journal: Macroeconomics
vol. 13, no. 1, January 2021
(pp. 35-78)
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Abstract

This paper studies the labor market effects of both documented and undocumented immigration in a search model featuring nonrandom hiring. As immigrants accept lower wages, they are preferably chosen by firms and therefore have higher job finding rates than natives, consistent with evidence found in US data. Immigration leads to the creation of additional jobs but also raises competition for natives. The dominant effect depends on the fall in wage costs, which is larger for undocumented immigration than it is for legal immigration. The model predicts a dominating job creation effect for the former, reducing natives' unemployment rate, but not for the latter.

Citation

Albert, Christoph. 2021. "The Labor Market Impact of Immigration: Job Creation versus Job Competition." American Economic Journal: Macroeconomics, 13 (1): 35-78. DOI: 10.1257/mac.20190042

Additional Materials

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
  • J23 Labor Demand
  • J31 Wage Level and Structure; Wage Differentials
  • J61 Geographic Labor Mobility; Immigrant Workers
  • M51 Personnel Economics: Firm Employment Decisions; Promotions
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