Three Essays on the Economic Impact of Immigration

• Main Author: Sharpe, James
• Format: Others
• Published: UKnowledge 2015
• Subjects: Immigration; Housing Rents; Elasticity of Substitution; Occupation-specific Skill; Quantile Regression; Labor Economics; Regional Economics
• Online Access: http://uknowledge.uky.edu/economics_etds/20; http://uknowledge.uky.edu/cgi/viewcontent.cgi?article=1018&context=economics_etds

With the significant rise in immigration to the U.S. over the last few decades, fully understanding the economic impact of immigration is paramount for policy makers. As such, this dissertation consists of three empirical essays contributing to the literature on the impact of immigration. In my first essay, I re-examine the impact of immigration on housing rents and completely controlling for endogenous location choices of immigrants. I model rents as a function of both contemporaneous and initial economic and housing market conditions. I show that existing estimates of the impact of immigration on rents are biased and the source of the bias is the instrumental variable strategy common in much of the immigration literature. In my second essay, I present a new approach to estimating the effect of immigration on native wages. Noting the imperfect substitutability of immigrants and natives within education groups, I posit an empirical framework where labor markets are stratified by occupations. Using occupation-specific skill to define homogeneous skill groups, I estimate the partial equilibrium (within skill group) effect of immigration. The results suggest that when one defines labor market cohorts that directly compete in the labor market, the effect of immigration on native wages is roughly twice as large as previous estimates in the literature. In my third essay, I return to the housing market and examine the effects of immigration within metropolitan areas. Specifically, I investigate the relationship between immigrant inflows, native outflows, and rents. Taking advantage of the unique settlement patterns of immigrants, I show that the effect of immigration on rents is lower in both high-immigrant neighborhoods and portions of the rent distribution where immigrants cluster. Contrary to the existing belief in the literature, the results suggest that the preferences of natives, not immigrants, bid up rents in response to an immigrant inflow.