Michael Amior will be presenting via Zoom. Members of the Princeton University community may gather together to attend in LAS Rm 271. Please see directions to the room.
In a generalization of the well-known “immigration surplus” result, we show that immigration which preserves the skill mix of migrants must always increase the average native worker’s marginal product, in any long-run constant returns economy. But in a monopsonistic labor market, immigration may also affect wages through the mark-downs imposed by firms. Using standard US census data, we reject the restrictions implied by the canonical competitive model. We attribute this rejection to an adverse mark-down effect, which quantitatively dominates the improvements in natives’ marginal products. The capture of migrants’ rents significantly expands the total surplus going to natives, but redistributes income among them (from workers to firms). Our estimates suggest that policies which constrain firms’ market power over migrants can substantially benefit native labor.