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.
"The Labor Market Impact of Immigration: Job Creation versus Job Competition."
American Economic Journal: Macroeconomics,
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
Wage Level and Structure; Wage Differentials
Geographic Labor Mobility; Immigrant Workers
Personnel Economics: Firm Employment Decisions; Promotions