The impact of immigration on native earnings in the United States, 1940 to 1980

Abstract

Prior research on the impact of immigration on native earnings in the United States has produced contradictory and inconclusive results. Using 1940 to 1980 census data, this study investigates the effect of immigration on the earnings of U.S. born citizens. A modified version of human capital, and the equilibrium model provide the theoretical framework. Results show that when we look at cross-sections, for every decade studied, except 1940, immigration had positive effects on the earnings of native born Americans. After controlling for possible simultaneity bias, and using panel regression analysis, the author found different results. Although not completely eliminated, the impact of immigration was substantially reduced. Based on his results and past research findings, the author recommends that U.S. immigration policy make it easier for foreign doctoral graduates and other professionals to adjust their status should they wish to live in the United States, adding that such practice would in the long run add to the productive capacity of the country. He recommends that U.S. corporations invest abroad and pay competitive wages to workers to discourage illegal inflows.