Christian Dustmann (University College London)

The Effects of Immigration on the Labor Market –  Identification and Interpretation

Abstract: Most studies on the labor market effects of immigration use repeated cross-sectional data to estimate immigration’s effects on regions. This paper shows that these parameters are composites of effects that address fundamental questions in the immigration debate but remain unidentified with repeated cross-sectional data. We provide a unifying framework that links typically estimated regional effects of immigration to their underlying components and show how these are identifiable from data that track workers over time. Our empirical application, based on a commuting policy in Germany, illustrates that such analysis yields a far more informative picture of immigration’s effects on wages, employment, and occupational upgrading.