Date Added: Jul 2010
The author shows that a CES production-function-based approach with skill differentiation and integrated national labor markets has predictions for the employment effect of immigrants at the local level. The model predicts that if the author looks at the employment (rather than wage) response by skill to immigration in a state, the author can estimates the substitutability-complementarily between natives and immigrants. This allows him to infer, other things constant, how immigrants stimulate or depress the demand for native labor. The author also uses a novel instrument based on demographic characteristics of total Central American migrants or of the Mexican Population to predict immigration by skill level within California.