Henrik Kleven
Kristian Jakobsen
Katrine Marie Jakobsen
Alessandro Guarnieri
Tanguy van Ypersele
Fabien Petit
Cecilia García-Peñalosa
Yonatan Berman
Nina Weber
Julian Limberg
David Hope
Pedro Tremacoldi-Rossi
Tatiana Mocanu
Marco Ranaldi
Silvia Vannutelli
Raymond Fisman
John Voorheis
Reed Walker
Janet Currie
Roel Dom
Marcos Vera-Hernández
Emla Fitzsimons
José V. Rodríguez Mora
Tomasa Rodrigo
Álvaro Ortiz
Stephen Hansen
Vasco Carvalho
Gergely Buda
Gabriel Zucman
Anders Jensen
Matthew Fisher-Post
José-Alberto Guerra
Myra Mohnen
Christopher Timmins
Ignacio Sarmiento-Barbieri
Peter Christensen
Linda Wu
Gaurav Khatri
Julián Costas-Fernández
Eleonora Patacchini
Jorgen Harris
Marco Battaglini
Ricardo Fernholz
Alberto Bisin
Jess Benhabib
Cian Ruane
Pete Klenow
Mark Bils
Peter Hull
Will Dobbie
David Arnold
Eric Zwick
Owen Zidar
Matt Smith
Ansgar Walther
Tarun Ramadorai
Paul Goldsmith-Pinkham
Andreas Fuster
Ellora Derenoncourt
Golvine de Rochambeau
Vinayak Iyer
Jonas Hjort
Elena Simintzi
Paige Ouimet
Holger Mueller
Pablo Garriga
Gabriel Ulyssea
Costas Meghir
Pinelopi Koujianou Goldberg
Rafael Dix-Carneiro
Alessandro Toppeta
Áureo de Paula
Orazio Attanasio
Seth Zimmerman
Joseph Price
Valerie Michelman
Camille Semelet
Anne Brockmeyer
Pierre Bachas
Santiago Pérez
Elisa Jácome
Leah Boustan
Ran Abramitzky
Jesse Rothstein
Jeffrey T. Denning
Sandra Black
Wei Cui
Mathieu Leduc
Philippe Jehiel
Shivam Gujral
Suraj Sridhar
Attila Lindner
Arindrajit Dube
Pascual Restrepo
Łukasz Rachel
Benjamin Moll
Kirill Borusyak
Michael McMahon
Frederic Malherbe
Gabor Pinter

The impact of immigration on wages, internal migration and welfare

What is this research about and why did you do it?

Concerns about the number and composition of immigrants coming to the United States in past years have led to proposals for stricter immigration policies, including building a border wall between the U.S. and Mexico and reforming the program of high skill immigrant visas. This study assesses who would lose and who would gain from such policies across different local labor markets. The analysis quantifies the welfare effects of immigration taking into account changes in wages, housing prices and internal migration responses. 

How did you answer this question?

I develop and estimate a spatial equilibrium model using the US Census data. I then evaluate immigration policies at the city level, taking into account workers’ mobility across local labor markets and heterogeneity among workers (skills, gender and nativity), as well as city characteristics (productivity, housing supply and amenities).

What did you find?

I find that the effect of the United States adopting a skill-selective immigration policy similar to the UK, which involves a 46% increase in high-skill immigrants, leads to welfare gains for low skilled workers, but also welfare losses for high skilled. Internal migration mitigates the initial negative impacts, particularity in cities where housing supplies are inelastic. Overall, the welfare impact of immigration is unevenly distributed across and within cities. Under both the skill selective and skill neutral immigration policies, there are substantial rental income gains accruing to landlords.

The map shows the quartiles of percentage change in welfare of high skill native workers across the 114 MSAs which have the highest immigrant population from 1990-2007. The remaining cities are combined as the outside option, or “non-popular destination for immigrants”. Under the skill selective immigration policy, high skill natives in cities highlighted in blue are most adversely affected whereas those in cities highlighted in red are least affected. (Vector Map of the United States of America with Counties)

Furthermore, I use the model to assess the welfare effects of the proposed border wall between Mexico and the U.S. I find that the potential benefits are significantly smaller than the estimated considerable construction costs.

What implications does this have for the research on wealth concentration or economic inequality?

This work highlights the importance of studying the welfare consequences of immigration policies at the local level and across different groups of workers as the impacts are unequally distributed. In all cases, there is a significant increase in rental income accruing to landlords from increased immigration. This suggests that an appropriate tax scheme on rental income and housing regulations would be an important consideration if policymakers want to redistribute gains/losses more evenly.

What are the next steps in your agenda?

I want to understand the role of migration and heterogeneity in local labor markets in explaining wage inequality over a worker’s lifespan. In other words, can children of low-income parents

improve their economic opportunities by working in local labor markets that represent better matches for them at various stages of their careers?

Citation and related resources

This paper can be cited as follows: Piyapromdee, S. (2021) 'The Impact of Immigration on Wages, Internal Migration and Welfare.' Review of Economic Studies, 88(1), pp. 406-453. An earlier version is available for free.

Related resources:

About the authors

Suphanit Piyapromdee

Related Content

expand icon


expand icon

Education materials