Immigrants' residential choices and their consequences / Liang Zheng (Central University of Finance and Economics), Zhong Zhao (Renmin University of China and IZA) ; IZA Institute of Labor Economics
VerfasserAlbert, Christoph In der Gemeinsamen Normdatei der DNB nachschlagen ; Monras, Joan In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, October 2017
Elektronische Ressource
Umfang1 Online-Ressource (45 Seiten) : Diagramme
SerieDiscussion paper ; no. 11075
URNurn:nbn:de:hbz:5:2-141041 Persistent Identifier (URN)
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Immigrants' residential choices and their consequences [2.83 mb]
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This paper investigates the causes and effects of the spatial distribution of immigrants across US cities. We document that: a) immigrants concentrate in large, high-wage, and expensive cities, b) the earnings gap between immigrants and natives is higher in larger and more expensive cities, and c) immigrants consume less locally than natives. In order to explain these findings, we develop a simple quantitative spatial equilibrium model in which immigrants consume (either directly, via remittances, or future consumption) a fraction of their income in their countries of origin. Thus, immigrants not only care about local prices, but also about price levels in their home country. Hence, if foreign goods are cheaper than local goods, immigrants prefer to live in high-wage, high-price, and high-productivity cities, where they also accept lower wages than natives. Using the estimated model we show that current levels of immigration have reduced economic activity in smaller, less productive cities by around 3 percent, while they have expanded the activity in large and productive cities by around 4 percent. This has increased total aggregate output per worker by around .15 percent.