The Effects of Immigration on the Labour Market - Identification and Interpretation

• Department of Economics

In this seminar, Christian Dustmann (UCL) will present his paper “The Effects of Immigration on the Labour Market - Identification and Interpretation.”

The impact of immigration on the welfare of populations in receiving countries is a widely studied issue, with the question of how it affects labour market outcomes of native workers at its core. Yet there is disagreement about the effects of immigration on native employment and wages, which is related to confusion about the underlying questions that estimated parameters address. We develop a unifying framework for the estimation of the labour market effects of immigration and discuss the identification issues that arise. We show that some fundamental parameters that describe immigration’s effect on wages and employment (such as the wage elasticity of labour demand or the effect of immigration on employment of those employed before the immigration shock) are only identified only under implausibly strong assumptions when using repeated cross-sectional data (as most extant studies). We illustrate that the identification problem can be addressed with longitudinal data that permit identification of these effects under only mild assumptions. Moreover, we extend the remit of analysis by studying the price- and displacement effects immigration has on different groups of natives, such as natives not in employment at the time of the immigration shock.

Co-authors: Uta Schoenberg, Jan Stuhler and Sebastian Otten