The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives

This chapter presents a simple theoretical model that describes the effects of immigration on the domestic labor market. It addresses the question of whether immigrants and natives within the same city compete in the same labor market. The chapter provides a regression analysis of the relation between immigrant shares and employment outcomes of natives across major cities. The results vary somewhat between the cross-sectional and first-difference analyses. The chapter examines the correlation across cities between the labor market outcomes of less-skilled natives and the fraction of immigrants in the city. It presents cross-sectional analyses for 1970 and 1980 as well as a first-differenced analysis of changes between 1970 and 1980. Working from a simple theoretical model of a local labor market, the chapter shows that the effects of immigration can be estimated from the correlations between the fraction of immigrants in a city and the employment and wage outcomes of natives.