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Working Paper
The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications
The U.S. experienced an extraordinary postpandemic surge in unauthorized immigration. This paper combines administrative data on border encounters and immigration court records with household survey data to document two new facts about these immigrants: They tend to be hand-to-mouth consumers and low-skilled workers that complement the existing workforce. We build these features into a model with capital, household heterogeneity and population growth to study the inflationary effects of this episode. Contrary to the popular view, we find little effect on inflation, as the increase in supply ...
Working Paper
Immigrant language barriers and house prices
Are language skills important in explaining the nexus between house prices and immigrant inflows? The language barrier hypothesis says immigrants from a non common language country value amenities more than immigrants from common language countries.> ; In turn, immigrants from non common language countries are less price sensitive to house price changes than immigrants from a common language country. Tests of the language barrier hypothesis with Swiss house prices show that an immigration inflow from a non common language country equal to 1 percent of an area's population is coincident with ...
Working Paper
High-Skill Migration, Multinational Companies, and the Location of Economic Activity
This paper examines the relationship between high-skill immigration and multinational activity. I assemble a novel firm-level dataset on high-skill visa applications and show that there is a large home-bias effect. Foreign multinational enterprises (MNEs) in the US tend to hire more migrant workers from their home countries compared to US firms. To quantify the general equilibrium implications for production and welfare, I build and estimate a quantitative model that includes trade, MNE production, and the migration decisions of high-skill workers. I use an instrumental variables approach to ...
Working Paper
Diversification and specialization of U.S. states
This paper documents the evolution of the international relationships of individual U.S. states along three dimensions: trade, migration, and finance. We examine how specialized or diversified state economies differ in terms of the products they export and with whom they trade, the origins of the immigrants who live in the state, and the origins of the foreign banks operating in the state. We show that states that are diversified along one of these dimensions are often quite specialized along others. New York is?perhaps, not surprisingly?the most diversified state in terms of global linkages.
Working Paper
Offshoring, Low-skilled Immigration, and Labor Market Polarization
During the last three decades, the U.S. labor market has been characterized by its employment polarization. As jobs in the middle of the skill distribution have shrunk, employment has expanded in high- and low-skill occupations. Real wages have not followed the same pattern. While earnings for high-skill occupations have risen robustly, wages for both low- and middle-skill workers have remained subdued. We attribute this outcome to the rise in offshoring and low-skilled immigration, and develop a three-country stochastic growth model to rationalize their asymmetric effect on employment and ...
Working Paper
Slowdown in Immigration, Labor Shortages, and Declining Skill Premia
We document a slowdown in low-skilled immigration that began around the onset of the Great Recession in 2007, which was associated with a subsequent rise in low-skilled wages, a decline in the skill premium, and labor shortages in service occupations. Falling returns to education also coincided with a decline in the educational attainment of native workers. We then develop and estimate a stochastic growth model with endogenous immigration and training to rationalize these facts. Lower immigration leads to higher wages for low-skilled workers but also to higher consumer prices and lower ...
Working Paper
Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments
We use a detailed establishment-level dataset from Germany to document a new dimension of firm heterogeneity: large firms spend a higher share of their wage bill on immigrants than small firms. We show analytically that ignoring this heterogeneity in the immigrant share leads to biased estimates of the welfare gains from immigration. To do so, we set up and estimate a model where heterogeneous firms choose their immigrant share and then use it to quantify the welfare effects of an increase in the number of immigrants in Germany. Two new adjustment mechanisms arise under firm ...
Working Paper
Heterogeneous Capital Ownership, Partial Democracy and Political Support for Immigration
This paper analyzes and compares equilibrium immigration levels of some popular political economy models in the context of unequal capital holdings. We show that immigration rises (falls) with inequality in a limited (inclusive) democracy where only a small (large) fraction of the population has voting rights. Furthermore, we highlight the similarities between a campaign-contributions model and a partial-democracy model in terms of their predictions about immigration policy. In particular, we show that extension of voting rights in a partial democracy has qualitatively similar implications on ...
Working Paper
Unauthorized Immigration and Fiscal Competition
Reflecting upon recent enforcement policy activism of US states and countries within the EU towards unauthorized workers, we examine the overlap of centralized (federal) and decentralized (state or regional) enforcement of immigration policies in a spatial context. Among other results, we find that if interstate mobility is costless, internal enforcement is overprovided, and border enforcement and local goods are underprovided when regions take more responsibility in deciding policies. This leads to higher levels of unauthorized immigration under decentralization. Interregional migration ...
Working Paper
The Postpandemic U.S. Immigration Surge: New Facts and Inflationary Implications
The U.S. experienced an extraordinary surge in immigration from 2021 to 2024, which triggered widespread discussions about its macroeconomic impact, particularly on inflation. To determine the impact of the immigration surge, we first document the salient features of these new immigrants: they are primarily low-skilled relative to the existing workforce and more likely to be hand-to-mouth consumers. We then incorporate these features into a heterogeneous agent model with capital-skill complementarity. We find that the supply- and demand-side effects of the immigration surge roughly cancel ...