%0 Generic
%A Ottaviano, G.I.P.
%A Peri, G.
%C London, UK
%D 2007
%F discovery:14266
%I Centre for Research and Analysis of Migration
%K JEL Classification: F22, J61, R23. Immigration, wages, rents, housing prices, U.S. states
%N 13/07
%T The effects of immigration on U.S. wages and rents: a general equilibrium approach
%U https://discovery.ucl.ac.uk/id/eprint/14266/
%X In this paper we document a strong positive correlation of immigration flows with  changes in average wages and average house rents for native residents across U.S.  states. Instrumental variables estimates reveal that the correlations are compatible  with a causal interpretation from immigration to wages and rents of natives.  Separating the effects of immigrants on natives of different schooling levels we find  positive effects on the wages and rents of highly educated and small effects on the  wages (negative) and rents (positive) of less educated. We propose a model where  natives and immigrants of three different education levels interact in production in a  central district and live in the surrounding region. In equilibrium the inflow of  immigrants has a positive productive effect on natives due to complementarities in  production as well as a positive competition effect on rents. The model calibrated  and simulated with U.S.-states data matches most of the estimated effects of  immigrants on wages and rents of natives in the period 1990-2005. This validation  suggests the proposed model as a useful tool to evaluate the impacts of alternative  immigration scenarios on U.S. wages and rents.