Gabriele Lucchetti (University of Nottingham)

Skills, Distortions, and the Labor Market Outcomes of Immigrants Across Space

Gabriele Lucchetti
University of Nottingham

Abstract

This paper studies the geography of the labor market outcomes of immigrant workers in the US, and its implications for spatial inequality. Using US micro-data, I document that immigrants do not earn a premium from working in big cities, relative to natives. Among immigrants, those from high-income countries are the only ones who receive a city-size earnings premium. Natives and immigrants from high-income countries work more in cognitive occupations, especially in big cities. To rationalize this evidence I build a spatial equilibrium model where cities’ technology is biased toward cognitive occupations, workers are heterogeneous in human capital, and wedges on earnings and labor supply distort immigrants’ allocation across cities and occupations relative to natives. Counterfactual results indicate that removing wedges reduces spatial earnings inequality among workers, but increases disparities in production across cities. An immigration policy that opens borders to college-educated immigrants would also boost real output per capita, but increase housing prices unevenly across cities.

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