Does Immigration Affect Wages? A Look at Occupation-Level Evidence

Pia M. Orrenius and Madeline Zavodny
Working Paper 2003-2a
Revised August 2003

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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 United States, 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 United States.

JEL classification: J61

Keywords: immigrants, natives, wages

The authors thank George Borjas, Janet Currie, and seminar participants at Claremont McKenna College, the 2003 Population Association of America meetings, the 2003 European Society for Population Economics meetings, and the 2003 NBER Labor Studies Summer Institute for helpful comments. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Dallas, the Federal Reserve Bank of Atlanta, or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to Pia Orrenius, Research Department, Federal Reserve Bank of Dallas, 2200 N. Pearl Street, Dallas, Texas 75201, 214-922-5747,, or Madeline Zavodny, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, Atlanta, Georgia 30309, 404-498-8977,