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Steven Raphael & Lucas Ronconi Goldman School of Public Policy UC Berkeley

Reconciling National and Regional Estimates of the Effect of Immigration on U.S. Labor Markets: The Confounding Effects of Native Male Incarceration Trends. Steven Raphael & Lucas Ronconi Goldman School of Public Policy UC Berkeley.

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Steven Raphael & Lucas Ronconi Goldman School of Public Policy UC Berkeley

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  1. Reconciling National and Regional Estimates of the Effect of Immigration on U.S. Labor Markets: The Confounding Effects of Native Male Incarceration Trends Steven Raphael & Lucas Ronconi Goldman School of Public PolicyUC Berkeley

  2. Findings from previous research on the effect of international immigrants on the wages and employment of natives • Studies exploiting geographically concentrated immigrant shocks find little evidence of an effect of immigrant labor market competition on native earnings (Card (1990)Hunt (1992) Friedberg (2001)) • Studies exploiting cross-city variation in the relative size of the immigrant population find modest negative effects (Altonji and Card (1991), Pischke and Velling (1997) Card (2001)) • National level studies that simulate the effect of immigrants on native earnings or estimate the effects at the national level tend to find larger competition effects (Borjas, Freeman, and Katz (1997)Borjas (2003), (2005)) although Ottaviano and Peri (2005) argue that the effect is concentrated primarily on previous immigrants)

  3. Summarizing the implied differences in the findings between the national level and cross-regional research

  4. What we do • We re-estimate national level reduced-form estimates of the effect of immigration on native labor market outcomes controlling for trends in native male incarceration rates. • We estimate a structural model of the aggregate economy incorporating incarceration trends into the estimation of the model’s parameters and simulate the effects of immigration on native wages.

  5. Channels through which prior incarceration may impact labor market outcomes • Former inmates are likely to have fewer years of non-institutionalized labor market experience. • Raphael and Stoll (2004), Raphael (2005) • Human capital depreciation while incarcerated • Employers may categorically exclude formers inmates from consideration • Holzer, Raphael, and Stoll (2005), Pager (2003), Pager and Western (2005). • Employers may statistically discriminate against applicants from high-incarceration sub-groups • Holzer, Raphael, and Stoll forthcoming, Autor and Scarborough (2005)

  6. Reduced-Form Analysis • where i indexes education group, j indexes experience level, and t indexes time. • We estimate this model for three native outcomes • Average log annual earnings • Average log weekly earnings • The fraction of the year employed

  7. Converting the coefficients on the immigrant share variable into a wage-supply shock elasticity

  8. Alternative Factor Price Supply Shock Elasticity Estimates from the Reduced-Form National Level Regressions

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