Federal Reserve Bank of Dallas Does Immigration Affect Wages? a Look at Occupation-level Evidence

Previous research has reached mixed conclusions about whether higher levels of immigration reduce the wages of natives. This paper reexamines this question using data from the Current Population Survey and the Immigration and Naturalization Service and focuses on differential effects by skill level. Using occupation as a proxy for skill, we find that an increase in the fraction of workers in an occupation group who are foreign born tends to lower the wages of natives in blue collar occupations—particularly after controlling for endogeneity—but does not have a negative effect among natives in skilled occupations. The results also indicate that immigrants adjusting their immigration status within the U.S., but not newly arriving immigrants, negatively impact the wages of low-skilled natives. This suggests that immigrants become substitutes for natives only as they spend more time in the U.S. JEL classification: J61