The Effects of Immigration on Places and People – Identification and Interpretation

Most studies on the labor market effects of immigration use repeated cross-sectional data to estimate the effects of immigration on regions. This paper shows that such regional effects are composites of effects that address fundamental questions in the immigration debate but remain unidentified with repeated cross-sectional data. We provide a unifying empirical framework that decomposes the regional effects of immigration into their underlying components and show how these are identifiable from data that track workers over time. Our empirical application illustrates that such analysis yields a far more informative picture of immigration's effects on wages, employment, and occupational upgrading.