The Effect of Changes in the U.S. Wage Structure on Recent Immigrants' Earnings

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Keywords
Abstract

Since recent immigrants tend to earn less than natives, their relative labor market
status has been adversely impacted by an increase in the return to labor market skills
and widening wage inequality over the past two decades. To evaluate the magnitude
of this effect, this study uses Social Security earnings records matched to recent cross
sections of the SIPP and CPS to estimate the change in the return to skills among
native born workers. This is then used to adjust the earnings gap between immigrants
and natives in order to estimate what the gap would have been if the return to skills
had remained at its 1980 level. The results suggest that the return to skills rose by 40
percent between 1980 and 1997, leading to a 10 to 15 percentage point decrease in the
relative earnings of recent immigrants. Thus examining solely the earnings of recent
immigrants may lead to an overly pessimistic picture of their actual labor market skills.

Year of Publication
2001
Number
458
Date Published
09/2001
Publication Language
eng
Citation Key
8239
URL
Working Papers