Immigration

Two nice NBER papers out today. First, Giovanni Peri finds that immigration in the US doesn't crowd out natives' employment; rather, increases in total factor productivity from increased immigration work to raise income per worker.

Next, David Card, Christian Dustmann and Ian Preston find that folks in Europe oppose immigration less because of worries about pecuniary effects on wages and more because of what he calls "compositional amenities" - people, especially the low-educated, value the characteristics of their coworkers, schools, and neighbours, and just dislike foreigners on those margins. So more of the dislike of immigration loads onto questions like "Do you agree or disagree that it is better for a country if everyone shares the same customs and traditions?" than ones like "Do you agree or disagree that immigrants harm the economic prospects of the poor?"

Our empirical results confirm that both concerns are important, though compositional concerns are significantly more important in understanding the variation in attitudes toward immigration policy. For example, 70% of the gap between the most- and least educated respondents in the ESS on the issue of whether immigration should be increased or reduced is attributable to differences in the intensity of concern over compositional amenities, while differences in economic concerns account for 10-15%. Differences in compositional concerns also explain most of the differences in attitudes between older and younger respondents. The age gap is a particular puzzle for models of immigration preferences that ignore compositional amenities, because many older people are retired, and face a much lower threat of labor market competition than young people.